TAIPEI (CNA) — Shares in Taiwan moved sharply lower by more than 100 points Monday as investors took their cue from a cluster of COVID-19 cases reported in Beijing, raising concerns over a possible second wave of infections, dealers said.
Selling focused on large cap tech stocks, serving as a driver to the downturn on the main board, while buying rotated to select financial and property stocks to give some support to the broader market by the end of the session, they said.
The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex closed down 123.68 points, or 1.08 percent, at 11,306.26, after moving between 11,299.45 and 11,469.84, on turnover of NT$174.66 billion (US$5.88 billion).
The market opened up 6.34 points on a mild technical rebound from a session earlier, and moved in a narrow range throughout the quiet morning session. Investors started to shift to the sell side in the afternoon in the wake of reports which said a district in Beijing was in a “wartime emergency” after a cluster of COVID-19 infections were found centered around a wholesale market, dealers said.
Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), in particular, came under heavy pressure, leading other tech heavyweights to move lower, dealing a blow to the Taiex by the end of the session, they said.
“A spike in COVID-19 cases in Beijing prompted investors to fear about resurgence of the virus, which could have an adverse impact on the economy, the second largest in the world,” Hua Nan Securities analyst Kevin Su said.
Moreover, some states in the United States, such as California, Florida and Texas, also reported an increase in virus cases as the country reopens its economy, while Washington continues to see massive protests to demand justice for the death of George Floyd at the hands of police, Su said.
“The Dow futures plunged about 900 points, pointing to an ugly opening on the spot market later in the day so investors here dumped their holdings to avoid further losses down the road,” Su added.
Su said the bellwether electronics sector was the focus of the sell-off Monday “as investors rushed to cut holdings in liquid stocks like TSMC in exchange for cash for the moment.”
TSMC, the most heavily weighted stock on the local market, fell 2.06 percent to close at NT$309.50, pushing down the electronics index and the semiconductor sub-index by 1.49 percent and 1.90 percent, respectively.
TSMC selling quickly spread to other semiconductor stocks with integrated circuit packaging and testing service provider ASE Technology Holding Co. down 1.06 percent to end at NT$65.60 and memory chipmaker Nanya Technology Corp. down 1.96 percent to close at NT$60.00.
Also in the tech sector, iPhone assembler Hon Hai Precision Industry Co. fell 1.28 percent to close at the day’s low of NT$77.00, and smartphone camera lens supplier Largan Precision Co. lost 0.48 percent to end at NT$4,120.00.
Bucking the downturn, shares in vaccine developer Adimmune Corp. rose 7.23 percent to close at NT$66.70, and drug maker China Chemical & Pharmaceutical Co. rose 3.85 percent to end at NT$21.60.
“As the market remains awash in liquidity, some investors parked their funds in market laggards in the financial and property sectors,” Su said.
In the financial sector, Cathay Financial Holding Co. rose 0.49 percent to close at NT$40.90, and China Development Financial Holding Co. gained 1.20 percent to end at NT$9.27. Among the gaining property developers, King’s Town Construction Co. added 0.63 percent to close at NT$32.20, and JSL Construction & Development Co. rose 1.38 percent to end at NT$33.00.
“Global financial markets still face uncertainty so it is possible the Taiex could encounter more volatility,” Su said. “The nearest technical support is expected at around 11,200 points, the 20-day moving average.”
According to the TWSE, foreign institutional investors sold a net NT$15.63 billion worth of shares on the main board Monday.