Taiwan shares end lower after strong earthquake, US losses

Taipei, April 3 (CNA) Shares in Taiwan reversed a rally a session earlier and closed down more than 100 points Wednesday as market sentiment was affected by a magnitude 7.2 earthquake earlier in the day and losses suffered by the US markets overnight.

The bellwether electronics sector led the downturn amid concerns about the possible impact on production resulting from the strong temblor while selling in the financial sector added downward pressure on the broader market as investors were afraid that insurance companies would make large compensation after the quake.

The Taiex, the Taiwan Stock Exchange’s (TWSE) weighted index, ended down 128.97 points, or 0.63 percent, at 20,337.60 after moving between 20,269.66 and 20,403.73 after a rally of 1.21 percent a session earlier. Turnover totaled NT$377.19 billion (US$11.79 billion).

The market opened down 0.38 percent and selling escalated as investors were motivated by the earthquake and the weakness in the US markets, where the Dow Jones Industrial Average fell 1.00 percent and the tech-heavy Nasdaq index dropped 0.95 percent amid uncertainty over the timing for the US Federal Reserve to kick off a rate cut cycle.

The electronics sector fell 0.66 percent at the end of the session with the semiconductor subindex down 0.99 percent after contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, lost 1.27 percent to close at NT$780.00.

TSMC’s losses contributed more than 80 points to Wednesday Taiex’s decline.

“The selling in TSMC and other tech heavyweights was partly sparked by the earthquake as investors feared their production would be damaged,” Mega International Investment Services Corp. analyst Alex Huang said.

“Fortunately, these major tech firms only temporarily halted production in part of their facilities and no major damage has been reported,” Huang said.

● Taiwan earthquake island’s strongest in 25 years

● Strong earthquake leads to halts in production at TSMC, other tech firms

For example, TSMC, the world’s largest contract chipmaker, said it evacuated employees in some of its facilities in Hsinchu to ensure their safety, but the industrial safety systems in those plants continued to function normally while deciding to temporarily halt construction on its new facilities around Taiwan and inspect them for safety reasons.

“TSMC has been in consolidation mode as the stock has failed in recent sessions to top the intraday high of NT$796 on March 8,” Huang said. “Investors are waiting for an investor conference scheduled for April 18 for TSMC’s updated guidance for 2024.”

Among other large-cap tech stocks, dynamic random access memory (DRAM) chip supplier Nanya Technology Corp. shed 1.30 percent to end at NT$68.20, United Microelectronics Corp., a smaller contract chipmaker, lost 0.96 percent to close at NT$51.60, and smartphone IC designer MediaTek Inc. dropped 0.43 percent to end at NT$1,160.00.

“These tech stocks were also hit by the losses incurred by their American counterparts overnight after a spike of the US treasury yields at a time when strong economic manufacturing activity dampened hopes that the Fed will start to cut rates in June,” Huang said.

Financial stocks

Overnight, the benchmark 10-year US treasury yield rose to a high since Nov. 28 after the US Institute for Supply Management’s manufacturing PMI in March showed the manufacturing sector moved into expansion for the first time since September 2022.

The financial sector fell 1.21 percent as investors expected insurers would make large compensation as the earthquake caused partial building collapses in Hualien and killed at least nine people, leaving more than 800 injured around Taiwan, dealers said.

Among the falling financial stocks, Cathay Financial Holding Co. lost 1.84 percent to close at NT$48.05, Mega Financial Holding Co. shed 1.36 percent to end at NT$39.75, Fubon Financial Holding Co. dropped 1.29 percent to close at NT$68.60, and CTBC Financial Holding Co. ended down 1.10 percent at NT$31.45.

Old economy sector

On the other hand, the steel index rose 1.44 percent amid expectations that reconstruction work after the earthquake will boost demand for steel products, dealers said.

In the sector, China Steel Corp., the largest steel maker in Taiwan, rose 1.44 percent to close at NT$24.65, and Tung Ho Steel Corp. gained 1.14 percent to end at NT$71.00.

Elsewhere in the old economy sector, Formosa Chemicals & Fiber Corp. shed 1.43 percent to close at NT$55.10, Formosa Plastics Corp. lost 1.13 percent to end at NT$70.00, and Nan Ya Plastics Corp. dropped 1.05 percent to close at NT$56.80, while Formosa Petrochemical Corp. ended up 0.14 percent at NT$72.30.

“It seemed that the US markets have turned more sensitive to economic data for now. So, investors had better keep a close eye on the upcoming March nonfarm payroll report (due Friday), which could dictate share prices on the global markets,” Huang said.

According to the TWSE, foreign institutional investors sold a net NT$18.19 billion of shares on the main board Wednesday.