Taiwan shares tumble on ‘Apple concept stock’ losses

On Jan. 2, Apple said its first quarter sales could total US$84 billion, down from an earlier estimate of US$89 billion to US$93 billion, blaming the cut on weaker-than-expected demand in China. (NOWnews)

TAIPEI (CNA) — Shares in Taiwan continued to tumble on Jan. 4, as the benchmark index fell more than 100 points to close below 9,400 on a sell-off of heavyweight suppliers to Apple Inc., dealers said.

The selling came as investors remained concerned over Apple’s cut in its first-quarter sales guidance based on slower-than-expected sales of the latest iPhones, pulling down the bellwether electronics sector, they said.

The weighted index on the Taiwan Stock Exchange (TWSE), the Taiex, closed down 109.91 points, or 1.16 percent, at 9,382.51, after moving between 9,319.28 and 9,427.24, on turnover of NT$105.98 billion (US$3.43 billion).

The market opened down 0.68 percent on follow-through selling from Thursday, when the Taiex ended down 0.65 percent, reflecting the 2.83 percent decline in the Dow Jones Industrial Average and a nearly 10 percent plunge in Apple shares overnight, dealers said.

Selling later accelerated as investors dumped more of their holdings in large-cap tech stocks, especially those in the Apple supply chain, to push the broader market below the 9,400 mark by the end of the session, they said.

“Apple’s cut in its sales forecast made many investors wary,” Concord Securities analyst Kerry Huang said. “The market is worried that Apple’s sales forecast downgrade is just a beginning and more tech firms will follow suit at a time of weak global demand.”

On Jan. 2, Apple said its first-quarter sales could total US$84 billion, down from an earlier estimate of US$89 billion to US$93 billion, blaming the cut on weaker-than-expected demand in China.

“That’s why losses among big Apple concept stocks here continued from a session earlier, sending the Taiex lower by more than 100 points,” Huang said. “I expect selling largely came from foreign institutional investors.” According to the TWSE, foreign institutional investors sold a net NT$9.29 billion in shares Friday.

Among the falling suppliers, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, fell 3.48 percent to close at NT$205.00, with 65.87 million shares changing hands.

TSMC’s losses alone dragged down the Taiex down by about 75 points and pushed down the electronics sector by 2 percent. iPhone assembler Hon Hai Precision Industry Co. lost 1.89 percent to close at NT$67.60, and Largan Precision Co., a smartphone camera lens supplier to Apple, shed 4.13 percent to end at NT$2,905.00.

Outperforming the broader market, flat panel maker Innolux Corp. gained 0.62 percent to close at NT$9.50, and rival AU Optronics Corp. ended unchanged at NT$11.90.

In the financial sector, which closed down 0.74 percent, Cathay Financial Holding Co. fell 1.33 percent to end at NT$44.55, and Fubon Financial Holding Co. lost 1.09 percent to close at NT$45.30 on concerns the local insurance industry could report bigger than expected foreign exchange losses.

“With a weakening tech sector, investors parked their funds in select old economy stocks as a safe haven,” Huang said.

In the food sector, chicken providers Charoen Pokphand Enterprise (Taiwan) Co. gained 0.73 percent to close at NT$55.50, and Great Wall Enterprise Co. rose 2.05 percent to end at NT$34.80 amid worries over African swine fever, which affects pigs.

“With the Taiex falling below the 9,400-point mark, the market has turned weaker technically and more losses may follow,” Huang said. The 9,400 mark, the recent intraday low set on Dec. 26, 2018, had been an important level of technical support.

“As the earnings season in the U.S. and Taiwan markets will soon start, investors should be on the alert for possible negative leads that could send ripples through share prices in the short term,” Huang said.

By Frances Huang