Taiwan shares end down on Wall Street plunge, but losses trimmed

2017/05/18 16:38:43
Taiwan shares end down on Wall Street plunge, but losses trimmed

Taipei, May 18 (CNA) Shares in Taiwan closed lower Thursday on the back of heavy losses on Wall Street overnight as investors at home and abroad feared that U.S. President Donald Trump could face impeachment related to reports of meddling in a probe into his former national security advisor, dealers said.

However, most of the earlier losses on the local main board were recovered after the weighted index fell below the 9,900-point level at one point, which prompted bargain hunters to pick up select market heavyweights until the end of the session, the dealers said.

The weighted index on the Taiwan Stock Exchange closed down 44.22 points, or 0.44 percent, at the day's high of 9,969.45, off an early low of 9.895.65, on turnover of NT$83.29 billion (US$2.76 billion).

The market opened down 0.61 percent to fall below 10,000 points and selling continued to push down the index even below 9,900 points in the wake of a 370-point dive on the Dow Jones Industrial Average overnight, the dealers said.

The turmoil in the U.S. market resulted from rising fears of an impeachment awaiting Trump on reports that he asked former FBI Director James Comey to end an investigation into his former national security adviser Michael Flynn related to Flynn's connections with Russia.

On the local main board, however, the downward pressure faded to a large extent after bargain hunters became active after witnessing the weighted index falling below 9,900 points, the nearest strong technical resistance level, the dealers said.

"It is unlikely that Trump will be impeached, since both chambers of the U.S. Congress are controlled by the ruling Republican Party, so most of the equity markets, including Taiwan, recouped part of their earlier heavy losses as investors turned calmer," Concord Securities analyst Kerry Huang said, referring to Hong Kong, South Korea and China.

"But Trump will no doubt be entangled in political unease in the near future, so the global financial markets are still worried that a push for tax reform and infrastructure work by Trump will be delayed," Huang said.

He said that Thursday's turnover on the local main board appeared moderate.

"That's why large-cap stocks, in particular in the bellwether electronics sector, recouped some or even all of their earlier losses to keep the weighted index from falling further," Huang said.

Among the stocks for which the downturn was reversed or capped, Largan Precision Co. (大立光), a smartphone camera lens supplier to Apple Inc., gained 0.73 percent to close at NT$4,855.00 to remain the most expensive stock in Taiwan after hitting a low of NT$4,755.00.

In addition, contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電), the most heavily weighted stock in the local market, fell 0.25 percent to end at NT$203.50, off an early low of NT$201.50.

Meanwhile, Hon Hai Precision Industry Co. (鴻海), an assembler of iPhones and iPads, which has been sued by U.S. chip designer Qualcomm Inc. for not paying licensing fees, saw its stock come off its earlier low of NT$100.50 to close at NT$102.00, down 0.97 percent.

In the petrochemical sector, which appeared relatively resilient and ended down 0.26 percent due to a rebound in crude oil prices, Nan Ya Plastics Corp. (南亞) rose 0.42 percent to close at NT$71.40.

"Amid political uncertainty in the U.S., volatility on Wall Street could continue to affect other markets," Huang said. "I am also worried about the Taiwan dollar. If the currency continues its weakness against the greenback, fund outflows from here are expected, which will be a bad sign for equities."

(By Frances Huang)
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