Shares in Taiwan yesterday closed lower, as market sentiment was hit by war in the Middle East after the US and Israel attacked Iran over the weekend, killing Iranian supreme leader Ayatollah Ali Khamenei.
The TAIEX ended down 319.40 points, or 0.9 percent, at 35,095.09, after foreign institutional investors sold a net NT$38.99 billion in shares on the market, Taiwan Stock Exchange’s data showed.
The New Taiwan dollar lost NT$0.180, or 0.57 percent, to close at NT$31.431 per US dollar, Taipei Forex Inc data showed.
Photo: Fang Pin-chao, Taipei Times
Shares fell in most Asian markets, but they rose in Shanghai, where investors snapped up energy, gold and defense stocks. The Shanghai Composite Index ended up 0.5 percent at 4,182.59 points, the highest close since June 2015.
Oil prices surged as all eyes were on the Strait of Hormuz, through which about one-fifth of the world’s seaborne oil trade flows as well as 20 percent of its liquefied natural gas. Brent jumped about 10 percent to US$79.90 a barrel, though it had briefly topped US$82 at one stage, while US crude climbed 8.2 percent to US$72.64 per barrel. Safe-haven gold rose 2.6 percent to US$5,413 an ounce.
“The US and Israeli attacks and retaliatory strikes by Iran have pushed crude oil prices sharply higher, leading investors at home and abroad to trim their stock holdings amid concerns over the economic impact,” Concord Securities Co (康和證券) analyst Kerry Huang (黃志祺) said.
“In Taiwan, investors simply seized on the news to pocket recent gains, with tech stocks the major targets of the sell-off, although most shares recovered some of their early losses,” Huang said.
“It is hard to predict the floor for the TAIEX as long as the geopolitical unease continues. Uncertainty is the last thing the market wants to see,” he added.
Contract chipmaker Taiwan Semiconductor Manufacturing Co (台積電), which accounts for more than 40 percent of total market value, set the tone, falling 1 percent to close at NT$1,975 after hitting a low of NT$1,940.
Artificial intelligence (AI) server maker and iPhone assembler Hon Hai Precision Industry Co (鴻海精密) fell 1.65 percent to end at NT$239, while Quanta Computer Inc (廣達電腦), another AI server maker, rose 3.26 percent to close at NT$301 on its relatively low valuation.
By contrast, among non-tech stocks, Formosa Petrochemical Corp (台塑石化) benefited from higher oil prices, gaining 3.67 percent to end at NT$56.50.
In China, investors piled into energy companies after oil prices surged, sending the shares of oil giants China National Offshore Oil Co (中國海洋石油), PetroChina Co (中石油) and China Petroleum & Chemical Corp (中國石油化工) to rise by the 10 percent limit.
A prolonged spike in oil prices would risk reigniting inflationary pressures globally, while also acting as a tax on business and consumers that could dampen demand.
On Sunday, OPEC+ did agree a modest oil output boost of 206,000 barrels per day for next month, but a lot of that product still has to get out of the Middle East by tanker.
“At least in the short term, the disruption to global energy supply is substantial, [and] this clearly adds upside risks to the oil price,” Aberdeen Investments emerging markets economist Michael Langham said.
Ryanair, Transavia, Volotea and other low-cost airlines are feeling the financial pain from high jet fuel prices as a result of the Middle East war and are cutting flights. The closure of the Strait of Hormuz has taken a huge chunk of oil supplies off the market, sending the price of jet fuel soaring and triggering fears of shortages that could force airlines to cancel flights. Airlines are not waiting for a lack of supplies to react. “Travel alert: Airlines are cutting thousands of flights right now,” Travel Therapy host Karen Schaler said in an Instagram reel this past weekend.
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