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Taiwan shares plunge, led by large-cap stocks
Central News Agency
2014-02-05 12:01 PM
Taipei, Feb. 5 (CNA) Share prices in Taiwan took a beating Wednesday morning, led by large-cap stocks across the board, amid fears that global equity markets will encounter further volatility, dealers said. Market sentiment appeared cautious as investors were put off by heavy selling in market heavyweights, such as Taiwan Semiconductor Manufacturing Co. (TSMC), suspecting that foreign institutional investors were dumping those stocks, they said. As of 11:18 a.m., the weighted index on the Taiwan Stock Exchange had lost 2.60 percent to 8,242.90 on turnover of NT$83.81 billion (US$2.77 billion). Among the large-cap electronics stocks, shares of TSMC, the most heavily weighted stock on the local bourse, fell 3.33 percent to NT$101.50, with 86.04 million shares changing hands. TSMC is the largest contract chip maker in the world. Shares of Hon Hai Precision Industry Co., the world's largest contract electronics maker that assembles iPads and iPhones for Apple Inc., had lost 4.48 percent to NT$81.10 on trading volume of 76.33 million shares. In the old economy sector, shares of China Steel Corp. had shed 2.50 percent to NT$25.40, while shares of Taiwan Cement Corp. had lost 3.95 percent to NT$42.55. "It came as no surprise that the local bourse faced heavy selling this morning after the U.S. market and other regional markets fell sharply during the Lunar New Year holiday," Hua Nan Securities analyst Stan Chang said. The Taipei market was closed between Jan. 28 and Feb. 4 for the holiday. The Dow Jones Industrial Index fell 3.18 percent and the Nasdaq dropped 3.17 percent between Jan. 28 and Feb. 3 before making a mild rebound overnight. In Asia, markets in Tokyo and Hong Kong fell 6.64 percent and 2.37 percent, respectively, between Jan. 28 and Feb. 4. The Tokyo market rebounded slightly and the Hong Kong market remained flat on Wednesday morning. "Although the U.S. market bounced back overnight, the gains were not impressive at all. So investors here tended to expect further volatility in global markets down the road that could have an impact on the local bourse," the analyst said. Chang said that judging from the relatively large turnover in Taipei Wednesday morning, selling was heavy. "I suspect foreign institutional investors are standing on the sell side and dumping large-cap stocks. TSMC has become one of the best indicators of foreign investors' attitude toward the local bourse because foreign investors hold a large chunk of TSMC shares," Chang said. As of Jan. 27, foreign institutional investors owned a 76.53 percent stake in TSMC, according to the TWSE. During the market's break in Taipei, TSMC's American depositary receipts (ADRs) fell 4.73 percent on Wall Street. Dealers said the downturn in TSMC's ADRs led investors to dump the stock in Taipei. "TSMC is a fundamentally healthy company, and the current selling is a result of the weakness of the global market," Chang said. "I expect the stock will see strong technical support at around NT$100." As for the broader market, Chang said more volatility is possible as investors are worried that the U.S. Federal Reserve will further cut back its bond buying program. The Fed announced on Jan. 29 that it would scale back its monthly fund injections by US$10 billion to US$65 billion. That was the second US$10 billion cut in the U.S. central bank's quantitative easing program, with the first pullback announced on Dec. 18. (By Jackson Chang and Frances Huang)
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