TAIEX slumps 3.81% to 19,527.12 points

Taiwan’s market fell 774 points on TSMC’s trimmed global chip demand forecast and heightened worry over broader military conflicts in the Middle East

The TAIEX yesterday plunged 3.81 percent, or 774 points, to 19,527.12 after Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) on Thursday trimmed its forecast for global chip demand this year and an apparent Israeli retaliation against Iran added to the jitters.

TSMC would keep its capital spending unchanged, but expected global chip demand to increase at only 10 percent due to lukewarm recovery in personal computers and smartphones and an expected decline in the auto industry, the company said.

The guidance disappointed Wall Street, triggering a 4.86 percent fall in American depositary receipts overnight and a 6.72 percent tumble in the local bourse yesterday, Taiwan Stock Exchange (TWSE) data showed.

“TSMC unveiled on-par financial results, but investors are looking for more exciting guidance,” Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林

啟超) said.

The company stood by an earlier estimate of a 20 to 25 percent pickup in annual revenue, but looked at a profit erosion of 0.5 percentage points from electricity rate hikes.

The lackluster outlook set off corrections in the company’s share price, which still retained 26.48 percent growth this year despite softening to NT$750.

TSMC dragged the TAIEX by 464 points, or 60 percent overall, due to its hefty weighting, Chung-Hua Institution for Economic Research (中華經濟研究院) vice president Wang Jiann-chyuan (王健全) said.

Asian bourses all took a hit, as the drone and missile exchanges between Israel and Iran heightened worry over broad regional military conflicts, Wang said.

Turnover inflated to NT$704.79 billion (US$21.68 biliion) after foreign portfolio managers oversold local shares by NT$85.75 billion and domestic proprietary traders cut positions by NT$22.39 billion net, the TWSE tally showed. By contrast, mutual funds overbought by NT$8.29 billion.

The local currency shrank NT$0.136 versus the US dollar to an eight-year low of NT$32.512, suggesting fast and panicky capital outflows, the central bank said on its Web site.

TWSE and the Financial Supervisory

Commission sought to calm public unease by saying the government should step in to support local shares when compelling and noneconomic external factors strike.

Listed companies last quarter posted total revenues of NT$9.53 trillion, rising 5.4 percent to the second-highest in history for the same period, the local bourse said, indicating that Taiwan is still on a course of steady recovery.

Local firms would distribute decent cash dividends this year, although their prices have climbed considerably, it added.