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.”
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.”
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