Taiwanese shares came under pressure yesterday, as selling was sparked by losses suffered by tech stocks on Wall Street last week, while buying rotated to the tourism sector due to the easing of border controls.
The TAIEX ended down 221.64 points, or 1.50 percent, at 14,556.87. Turnover on the main board totaled NT$198.444 billion (US$6.4 billion), with foreign institutional investors selling a net NT$10.77 billion of shares, Taiwan Stock Exchange data showed.
“After the nine-in-one local elections on the weekend, many investors shifted their attention back to the fundamentals,” Concord Capital Management Corp (康和投顧) analyst Lu Chin-wei said. “Worries have re-emerged over inventory adjustments in the global semiconductor industry, with many investors punishing large tech stocks throughout the session today.”
Photo: CNA
Taiwan Semiconductor Manufacturing Co (台積電), the most heavily weighted stock on the local market, tumbled 3.51 percent to close at the day’s low of NT$480.5. The stock’s losses contributed more than 140 points to the TAIEX’s fall.
An escalation of protests in China against the government’s “zero COVID-19” policy also weighed on the local market as many investors feared that the unrest would hinder production and hurt demand in the world’s second-largest economy, leading to selling of export-oriented tech stocks in Taipei, Lu said.
Local election results might only impact markets for a day, Uni-President Assets Management Co (統一投顧) chairman Li Fang-kuo (黎方國) said, adding that “we are still positive on the outlook of stocks, as TAIEX usually rises in December.”
The old economy stocks mostly moved in a narrow range throughout the session, while the tourism sector attracted strong buying, jumping by 2.48 percent, on hopes that the easing of pandemic border controls would push up the number of arrivals and boost revenue.
The New Taiwan dollar lost NT$0.107 to close at NT$31.012 against the US dollar in Taipei trading yesterday.
The local currency, which has risen more than 4 percent this month, would probably weaken to about NT$33 against the greenback by the end of the first quarter, Mizuho Bank Ltd and RBC Capital Markets forecast, as overseas shipments shrink for a second straight month. The outlook isn’t bright with a global recession looming and big tech shedding jobs, while COVID-19 infections rise in China — the biggest trading partner of Taiwan's export-reliant economy.
Goldman Sachs Group Inc also said this month it’s underweight on the NT dollar as geopolitical risks could lead to foreign selling of Taiwanese shares.
Despite its recent rebound, the NT dollar is down more than 10 percent this year — set for its steepest slide since 1997 — given a widening rate differential with the US.
The central bank hiked interest rates by only 50 basis points this year, among the smallest in Asia, even as the US Federal Reserve raised interest rates by 375 basis points. Taiwanese policymakers are next to decide on rates on Dec. 15.
“We expect the Taiwan dollar to revert to 32 to 33 level in the medium term, as the recession will dampen demand for Taiwan’s electronic exports,” Mizuho Bank foreign exchange strategist Ken Cheung (張建泰) said. “The central bank’s rate hike pace will also lag the Federal Reserve’s rate hike cycle, and the currency will stay soft compared to its peers.”
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.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
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