Taiwan shares dive below 10,600 points on tariff threat

Trump said in a series of tweets that the punitive tariffs are scheduled to take effect Sept. 1. The announcement came after the U.S. and China resumed trade talks in Shanghai this week but did not make any significant progress. (NOWnews)
Trump said in a series of tweets that the punitive tariffs are scheduled to take effect Sept. 1. The announcement came after the U.S. and China resumed trade talks in Shanghai this week but did not make any significant progress. (NOWnews)

TAIPEI (CNA) — Shares in Taiwan took a beating Friday, plunging nearly 2 percent after a surprise announcement by U.S. President Donald Trump overnight that the United States will impose 10 percent tariffs on an additional US$300 billion in Chinese goods, dealers said.

The new tariffs would cover smartphones, including iPhones, made in China, leading to particularly heavy pressure on listed Taiwanese tech vendors in the Apple supply chain, dealers added.

Old economy and financial stocks also came under downward pressure in line with the broader market amid escalating trade friction between Washington and Beijing, sending the market even lower, dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE), the Taiex, ended down 182.71 points, or 1.70 percent, at 10,549.04, after moving between 10,524.68 and 10,641.28, on turnover of NT$158.05 billion (US$5.04 billion).

The market opened down 0.84 percent in reaction to a 1 percent decline in the Dow Jones Industrial Average overnight. Trump’s announcement of new tariffs turned a 311-point gain in early trading on the Dow into a 280-point fall by the end of the session.

In Taiwan, Apple suppliers such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and smartphone lens maker Largan Precision Co. were hit hard, pushing the Taiex below 10,600 points for the first time since June 18, when it closed at 10,566.74.

Trump said in a series of tweets that the punitive tariffs are scheduled to take effect Sept. 1. The announcement came after the U.S. and China resumed trade talks in Shanghai this week but did not make any significant progress.

“The U.S. president’s threat is aimed at forcing China to cut a deal by Sept. 1 or the new tariffs will come into being,” Hua Nan Securities analyst Kevin Su said.

“But few in the market expect a deal to be reached by then, so investors around the world simply dumped stocks to avoid further losses down the road,” Su said, referring not only to Wall Street but also to other regional markets.

“Look at the expanded turnover. I think many investors just panicked,” Su said.

Su said investors here rushed to cut their holdings in leading Apple concept stocks because the new tariffs on US$300 billion of goods imported from China will cover smartphones and PCs.

Among the Apple suppliers that lost ground, TSMC, the most heavily weighted stock in the local market, fell 1.95 percent to close at NT$251.50, with 53.95 million shares changing hands.

TSMC’s fall alone cost the Taiex about 50 points and contributed to a 2.07 percent fall in the bellwether electronics sector.

Largan tumbled 7.93 percent to close at NT$3,890.00, Hon Hai Precision Industry Co., the largest iPhone assembler, lost 3.08 percent to end at NT$75.50, and Pegatron Corp., a smaller iPhone assembler, fell 2.17 percent to close at NT$49.70.

“Judging from the movement of these tech heavyweights, I suspect foreign institutional investors were sellers,” Su said.

According to the TWSE, foreign institutional investors sold a net NT$19.65 billion in shares on Taiwan’s market Friday.

Selling spread to the old economy sector as market sentiment was hurt by the escalating trade skirmish, Su said.

Among them, Formosa Chemicals & Fiber Corp. shed 2.02 percent to close at NT$92.00, Formosa plastics Corp. lost 2.01 percent to end at NT$97.50, and textile maker Far Eastern New Century Corp. fell 1.20 percent to close at NT$428.90.

In the financial sector, which ended down 1.26 percent, Fubon Financial Holding Co. fell 1.28 percent to close at NT$42.45, and E. Sun Financial Holding Co. fell 1.37 percent to end at NT$25.25.

After Friday’s sell-off, Su said, the Taiex has become technically fragile.

“The downbeat mood over future trade talks between Washington and Beijing means that losses on Taiwan’s market could continue,” Su said. “I wouldn’t rule out the possibility of the Taiex testing 10,227 points, the intraday low of May 29, in the near term.”

By Frances Huang