Taiwanese shares took a beating yesterday as the benchmark TAIEX fell to its lowest point in almost one year, as market worries remained over planned rate hikes by the US Federal Reserve, dealers said.
The bellwether electronics sector continued its downtrend, led by large-cap semiconductor stocks, while the financial sector saw a sell-off as investors rushed to downsize their portfolios amid market volatility, they said.
The TAIEX at its close was down 359.28 points, or 2.19 percent, at the day’s low of 16,048.92. Turnover totaled NT$239.82 billion (US$8.07 billion), with foreign institutional investors selling a net NT$21.15 billion of shares on the main board, Taiwan Stock Exchange (TWSE) data showed.
Photo by Sam Yeh / AFP
Yesterday’s closing level was the lowest since May 20 last year, when the TAIEX ended at 16,042.36, TWSE data showed.
“While US Federal Reserve Chair Jerome Powell has ruled out an increase of 75 basis points in each of the upcoming policymaking meetings, the rate hike cycle has been put in place, and many investors at home and abroad are increasingly worried about liquidity being drained from the market,” MasterLink Securities Corp (元富證券) analyst Tom Tang (湯忠謙) said.
The Fed raised its key interest rate by 50 basis points in a meeting held last week after a 25 basis point increase in March in an attempt to tackle inflation.
“In Taipei, investors stayed jittery about the US markets’ performance, so they simply scrambled to further unload their holdings. Today, massive selling was seen among financial stocks, having spread from their tech counterparts,” Tang said.
The financial sector closed down by 3.4 percent, and the electronics sector fell by 1.72 percent overall, with the semiconductor subindex declining by 1.78 percent, and the transportation sector, which includes major shipping and airline stocks, declined 3.53 percent, TWSE data showed.
“Today’s turnover remained low, as many investors were reluctant to buy during the dips since they fear more losses down the road,” Tang said. “The market also remains alert to the impact on the economy from COVID-19 lockdowns in China.”
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
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