Taipei, Sept. 9 (CNA) – Shares in Taiwan took a sharp nosedive on Monday, influenced by significant losses in U.S. markets from the previous week. Growing worries about the American economy, particularly following underwhelming August job data, contributed to this decline, according to market dealers.
Market Reaction to U.S. Sell-Off
The local main board’s sell-off was primarily concentrated in the bellwether electronics sector. This trend resulted from the knee-jerk reaction to the plunge on U.S. markets where the Dow Jones Industrial Average dipped by 1.01%, and the Nasdaq index shed 2.55%. Bargain hunters, however, became more active, helping to cap the losses. Thus, the benchmark index remained above 20,922.17 points—an intraday low observed on September 4.
Intraday Movements and Turnover
On Monday, the Taiex, which is the weighted index on the Taiwan Stock Exchange (TWSE), ended down by 290.75 points, or 1.36%, closing at 21,144.44. The market opened down 1.43% and moved between 20,922.51 and 21,163.91, with a total turnover of NT$302.48 billion (US$9.43 billion).
Disappointing U.S. Job Data
On Friday, reports from Washington indicated that the U.S. economy created only 142,000 jobs in August, falling short of market expectations of about 165,000 jobs. The jobless rate slightly reduced from 4.3% in July to 4.2%, intensifying fears of an impending recession in the U.S.
Federal Reserve’s Potential Actions
Kerry Huang, an analyst with Concord Securities, noted that weaker-than-expected manufacturing activity in August coupled with the disappointing nonfarm payroll data ignited recession fears. Consequently, "the Federal Reserve could act more aggressively in its rate cut cycle to stimulate the economy," Huang stated. The Fed is anticipated to cut rates by 25 basis points during its meeting scheduled for September 17-18, with more significant cuts potentially coming later in the year.
Tech Stocks: Focus on TSMC
After a 4.20% plunge in its American depositary receipts (ADRs) on Friday, Taiwan Semiconductor Manufacturing Co. (TSMC) saw a decline of 2.07% to close at NT$899.00. TSMC’s losses contributed significantly to the Taiex’s fall, dragging the electronics index and semiconductor sub-index down by 1.52% and 1.93%, respectively.
Huang mentioned, "I suspect bargain hunting came from local institutional investors, while their foreign counterparts largely stayed cautious." According to the TWSE, foreign institutional investors sold a net NT$50.12 billion worth of shares on the main board on Monday.
Below is a table detailing the key tech stocks affected:
| Company | Sector | Percentage Change | Closing Price (NT$) |
|---|---|---|---|
| Taiwan Semiconductor (TSMC) | Semiconductors | -2.07% | 899.00 |
| AIchip Technologies | ASIC | -4.32% | 2,325.00 |
| MediaTek Inc. | Smartphone ICs | -3.49% | 1,105.00 |
| ASE Technology Holding | IC packaging/testing | +0.35% | 142.00 |
| Quanta Computer Inc. | AI Servers | -2.53% | 250.00 |
| Inventec Corp. | AI Servers | -2.42% | 42.25 |
| Hon Hai Precision Industry (Foxconn) | iPhone Assembly | -2.55% | 172.00 |
| Largan Precision Co. | Smartphone Camera Lenses | -1.46% | 2,700.00 |
Impact on Other Sectors
Fears over a potential hard landing for the U.S. economy, which could reduce global demand, have also impacted old economy stocks. In the raw material sector, the petrochemical industry saw a 1.15% loss with notable companies like Formosa Petrochemical Corp. dropping by 4.72%.
The steel industry wasn’t spared; China Steel Corp., Taiwan’s largest steel maker, fell by 2.38%. Moreover, the construction industry declined by 1.89%, partly due to anticipated credit controls from the central bank aimed at reining in the home market. King’s Town Construction Co. and JSL Construction & Development Co. both saw significant drops in share prices.
Financial Sector and Ongoing Market Consolidation
The financial sector experienced a 0.92% loss, with major players like Fubon Financial Holding Co. and Cathay Financial Holding Co. seeing declines. According to Huang, it’s possible that consolidation will persist on U.S. markets until the Fed’s meeting, with the Taiwan market likely to follow suit. "Investors had better stay on the sidelines and just watch," he advised.
In the meantime, pertinent developments and market reactions can be monitored through sources like Bloomberg and Reuters.
By Pan Chih-yi and Frances Huang
