Taiwan stock market worst performer in Asia for the week

2018/10/06 16:02:09 fontsize-small fontsize-default fontsize-big
Taiwan stock market worst performer in Asia for the week

Taipei, Oct. 6 (CNA) Taiwan's stock market suffered the steepest decline of any market in Asia this week as a stronger U.S. dollar led to heavy fund outflows out of the region, according to First Securities Investment Trust Co. (FSITC).

The Taiex, the benchmark weighted index on the Taiwan stock exchange, fell 4.44 percent this week, ahead of the 4.09 percent fall seen in Indonesia's main market, data compiled by FSITC showed.

Other major stock markets in Asia also moved lower, though by no more than 3.5 percent, as the U.S. dollar picked up steam amid fears that the U.S. Federal Reserve will accelerate the pace of its planned rate hike cycle.

For the week, the Taiex shed 489.22 points, or 4.44 percent, to close at 10,517.12 on Friday. The bellwether electronics sector led the downturn, with selling focused on liquid large cap stocks, especially contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC).

TSMC, the most heavily weighted stock in the local market, lost 4.76 percent for the week, helping drive the electronics component sub-index down 4.88 percent.

The sell-off sent the Taiex below the 2017 closing level of 10,642.86, meaning the market has fallen 1.18 percent for the year to date.

Concerns over faster rate hikes by the Fed were heightened by a spike in the U.S. benchmark 10-year bond yield to a new high since 2011.

The spike came after Fed Chair Jerome Powell said Wednesday that the Fed had a long way to go before interest rates hit neutral, suggesting to markets that more hikes could be on the horizon.

Taiwan's market was also hurt by worries of rising geopolitical tensions after a CNN report said the United States is planning a show of force in areas close to Chinese-claimed territory in the South China Sea and the Taiwan Strait.

According to FSITC, foreign institutional investors sold a net US$1.15 billion in shares on Taiwan's market, the second largest net sell in Asia, trailing only the net sell of US$1.21 billion in South Korea's market.

FSITC said the heavy losses have left the market technically fragile, and escalating trade friction between the United States and China will only increase the odds that the Taiex sees more volatility in the near future.

Yang Yuan-han (楊遠瀚), who manages the Jih Sun MIT Mainstream Fund, said foreign institutional investors have steadily cut their holdings of net long-position futures contracts in recent sessions to less than 10,000 on Friday, indicating that many of them have turned bearish on the market's prospects.

Yang said investors should follow foreign institutional investors' holdings of long-position futures contracts to determine changes in their investment strategies and market outlooks.

(By Tien Yu-pin and Frances Huang)
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