The TAIEX yesterday took a beating, plunging more than 200 points as worries over cross-strait tensions escalated ahead of an expected visit by US House of Representatives Speaker Nancy Pelosi.
Selling was seen across the board, affecting large-cap stocks in both the electronic and non-tech sectors, while turnover remained moderate, indicating many investors were reluctant to buy during the dips amid fears China would take retaliatory action in response to Pelosi’s visit.
The TAIEX closed down 234.46 points, or 1.56 percent, at 14,747.23. Turnover totaled NT$214.876 billion (US$7.16 billion), with foreign institutional investors selling a net NT$19.66 billion of shares on the main board, Taiwan Stock Exchange data showed.
Photo: CNA
“Due to Pelosi’s expected visit, tensions across the Taiwan Strait have risen,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang said (黃國偉) said. “Any equity market is vulnerable to political leads like this and that is why the TAIEX came under heavy pressure throughout the session.”
Pelosi, who embarked on an Asian tour on Sunday, was scheduled to arrive in Taiwan yesterday night, according to foreign and local media reports.
She was expected to visit the Legislative Yuan in Taipei and meet with President Tsai Ing-wen (蔡英文) this morning before wrapping up her short trip, the reports said.
“It was no surprise that investors rushed to cut their holdings today to avoid further losses down the road,” Huang said. “Few investors appeared willing to pick up bargains, despite the heavy losses, which kept turnover moderate.”
The sell-off took a toll on the bellwether electronics sector, which includes many liquid large-cap stocks, including contract chipmaker Taiwan Semiconductor Manufacturing Co (台積電), which tumbled 2.38 percent, and led to the electronics and semiconductor sub-indices losing 1.84 percent and 2.39 percent respectively.
The transportation sub-index, which includes major shipping and airline stocks, was also hit hard, falling 2.76 percent and adding downward pressure to the broader market.
The food sub-index slid 2.15 percent following China’s imposition of a ban on products from more than 100 Taiwanese companies.
“Today’s sell-off drove the TAIEX below the nearest technical resistance at about 14,900 points. I think fragile market sentiment will result in more selling,” Huang said. “The National Stabilization Fund could intervene in the event of more losses.”
The NT$500 billion stabilization fund has since July 12 been authorized to intervene in the equity market to serve as a buffer against unexpected external factors.
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