Shares in Taiwan took a hit yesterday as investor sentiment was spooked by the US bombing of three nuclear sites in Iran over the weekend, raising concerns about escalating political tensions in the Middle East.
The TAIEX closed down 313.72 points, or 1.42 percent, at 21,732.02, with foreign institutional investors offloading a net NT$15.21 billion (US$511.5 million) in shares on the main board, Taiwan Stock Exchange data showed.
“The US strike complicated the conflicts in the Middle East, and the TAIEX simply reacted to growing geopolitical unease today,” Concord Securities Co (康和證券) analyst Kerry Huang (黃志祺) said.
Photo: RITCHIE B. TONGO, EPA-EFE
“With US President Donald Trump floating the idea of regime change in Iran, there are growing fears that Washington will send ground forces to oust the current Iranian leadership, which would further exacerbate the situation,” Huang said.
Contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the most heavily weighted stock in the TAIEX, shed 3.32 percent to end at NT$1,020, contributing about 280 points to the index’s fall.
“TSMC shares underperformed and served as a driver to the TAIEX’s losses as Washington is reportedly considering an end of waivers that allow the chipmaker and others to send American technology to China,” Huang said.
Petrochemical stocks saw gains following a spike in international crude oil prices, with Formosa Petrochemical Corp (台塑石化) rising 3.9 percent, Formosa Plastics Corp (台灣塑膠) gaining 1.61 percent and Nan Ya Plastics Corp (南亞塑膠) up 0.37 percent.
“Investors should monitor to see if Iran will follow through with shutting down the Strait of Hormuz, as reported,” Huang said.
If Hormuz, a critical passage for oil shipments, is closed, crude oil prices are likely to rise higher, adding pressure to inflation, he added.
International crude oil prices initially surged more than 2 percent, but later retreated, losing about 0.4 percent in Asian trading, as investors awaited Iran’s response to US strikes on its nuclear facilities.
Asian stock markets mostly retreated, while European bourses saw modest gains, and US stock futures edged higher.
The US dollar strengthened against other currencies, but analysts questioned how sustainable this would be.
“Everything hinges on Iran’s response — whether it’s a symbolic jab or a haymaker that knocks the Strait of Hormuz offline,” SPI Asset Management managing partner Stephen Innes said.
Iran, a major oil producer, sits on the Strait of Hormuz, through which a significant portion of the world’s crude oil passes.
While closing the waterway would be technically challenging, it could severely disrupt oil transit, causing oil prices to surge, insurance rates to spike and making shippers reluctant to operate without US Navy escorts.
Additional reporting by AP and AFP
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