Electronics Selloff Drives Taiex Down
Taiwan's stock market suffered a steep decline on Friday, with the Taiex, the Taiwan Stock Exchange's benchmark index, ending down 755.64 points, or 1.61 percent, at 46,184.85. The index moved between 45,942.44 and 46,651.21 during the session, and turnover reached NT$721.91 billion (US$22.84 billion). The electronics sector led the losses, according to dealers, as investors reacted to mounting concerns over a potential interest rate hike by the U.S. Federal Reserve.[S1]
The decline came after Washington disclosed that August's producer price index posted its steepest month-on-month rise since May, while global crude oil prices also jumped. Together these factors deepened inflation concerns, drove U.S. Treasury yields upward and strengthened the case for another Fed rate increase. Kevin Su, an analyst at Hua Nan Securities, said rate-sensitive American tech shares lost steam during the overnight session, and Taiwanese tech stocks merely tracked that move.[S1]
Tech Giants and Financials Diverge
Tech heavyweights absorbed most of the damage. TSMC closed 1.63 percent lower at NT$2,410.00, subtracting roughly 320 points from the Taiex, after the Philadelphia Semiconductor Index slid 2.66 percent and the chipmaker's ADRs shed 1.68 percent in U.S. trading. MediaTek dropped 2.86 percent to NT$4,585.00, Nanya Technology fell 4.27 percent to NT$493.00, and ASE Technology Holding ended at NT$618.00, down 4.92 percent. Hon Hai lost 1.20 percent to NT$248.00, Delta Electronics slipped 3.28 percent to NT$1,620.00, while Quanta Computer edged up 0.15 percent to NT$336.50.[S1]
Financial shares, by contrast, drew safe-haven buying and helped cushion the wider market. The financial index advanced 1.12 percent. E. Sun Financial Holding rose 3.00 percent to NT$46.30, and Mega Financial Holding added 3.61 percent to finish at NT$51.80. Fubon Financial Holding and Cathay Financial Holding both closed flat, at NT$148.50 and NT$110.50 respectively. Analyst Kevin Su observed that robust appetite for liquidity has lifted financial firms' earnings by generating greater interest income.[S1]
Old Economy Stocks Under Pressure
Traditional economy shares mostly came under selling pressure as worries about a Fed rate hike weighed on sentiment, with raw material plays hit especially hard. China Steel Corp., the nation's biggest steelmaker, closed 1.05 percent lower at NT$18.90, and Chung Hung Steel Corp. finished at NT$16.65, down 1.48 percent. Longchen Paper & Packaging Co. shed 1.88 percent to NT$10.45, while competitor Cheng Loong Corp. dropped 2.94 percent to NT$24.80.[S1]
Attention now turns to the U.S. consumer price index for August, scheduled for release later on Friday, which investors view as a crucial gauge for the Fed's next move. After the producer price index figures, the probability of a quarter-point rate increase next week climbed to roughly 70 percent. Data from the Taiwan Stock Exchange showed foreign institutional investors sold a net NT$89.27 billion of main-board shares on Friday.[S1]
