Shares in Tai­wan tum­ble, pulled lower by fi­nan­cial sec­tor: deal­ers

The China Post - - TAIWAN BUSINESS -

Shares in Tai­wan took a beat­ing Wed­nes­day, pulled lower by the fi­nan­cial sec­tor amid fears that a weaker Chi­nese yuan will erode the value of the con­sid­er­able yuan­de­nom­i­nated as­sets held by lo­cal fi­nan­cial in­sti­tu­tions, deal­ers said.

“Ap­ple con­cept stocks” also faced heavy selling pres­sure, led by smart­phone cam­era lens sup­plier Lar­gan Pre­ci­sion Co. ( ), af­ter Ap­ple shares plunged overnight due to wor­ries the yuan de­pre­ci­a­tion will lead to for­eign ex­change losses for the U.S. com­pany, they said.

The weighted in­dex on the Tai­wan Stock Ex­change (TWSE) closed down 110.76 points, or 1.31 per­cent, at 8,283.38, af­ter mov­ing be­tween 8,235.95 and 8,376.59, on turnover of NT$95.45 bil­lion (US$2.96 bil­lion).

The mar­ket opened down 0.33 per­cent in re­ac­tion to heavy losses on Wall Street af­ter the Peo­ple’s Bank of China (PBOC) al­lowed the Chi­nese yuan to fall sig­nif­i­cantly by cut­ting the yuan’s ref­er­ence rate against the U.S. dol­lar, deal­ers said.

Wor­ries Over Yuan-de­nom­i­nated


Selling then es­ca­lated, with fi­nan­cial stocks par­tic­u­larly un­der pres­sure be­cause of wor­ries over the value of their yuan-de­nom­i­nated as­sets. Com­pa­nies in the Ap­ple sup­ply chain also tum­bled af­ter a 5.2 per­cent fall in Ap­ple shares overnight, they said.

“Be­fore to­day’s plunge, Tai­wan’s fi­nan­cial sec­tor had out­per­formed the broader mar­ket in re­cent ses­sions. In­vestors sim­ply seized on the yuan’s de­pre­ci­a­tion as a rea­son to lock in their gains on fi­nan­cial stocks,” Mega In­ter­na­tional In­vest­ment Ser­vices Corp. an­a­lyst Alex Huang said.

“I think the selling in the fi­nan­cial sec­tor came mostly from for­eign in­vestors,” Huang said. Ac­cord­ing to the TWSE, for­eign in­sti­tu­tional in­vestors sold a net NT$8.79 bil­lion worth of shares on the stock ex­change Wed­nes­day.

The PBOC cut the yuan’s ref­er­ence rate against the U.S. dol­lar by 1.62 per­cent Wed­nes­day, af­ter a 1.86 per­cent cut a day ear­lier. The PBOC’s set off a cur­rency dep­re­ca­tion com­pe­ti­tion in the re­gion.

Fi­nan­cial Sub-in­dex Closed Down


The fi­nan­cial sub-in­dex closed down 4.94 per­cent at 1,071.19. Among the los­ing fi­nan­cial stocks, Fubon Fi­nan­cial Hold­ing Co. (

) lost 6.87 per­cent to end at NT$52.90, and ri­val Cathay Fi­nan­cial Hold­ing Co. ( ) shed 7.09 per­cent to close at NT$46.55.

“The yuan’s de­pre­ci­a­tion is ex­pected to hurt these fi­nan­cial in­sti­tu­tions’ ex­po­sure to China,” Huang said.

“To­day’s fall has made the fi­nan­cial sec­tor tech­ni­cally weaker, and I ex­pect that the fi­nan­cial sub-in­dex could test the near­est tech­ni­cal sup­port at around 1,040 points soon.”

Huang said Ap­ple’s down­turn dealt another blow to the lo­cal eq­uity mar­ket by drag­ging down wanese sup­pli­ers.

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Ap­ple Con­cept Stocks

Among the Ap­ple con­cept stocks, Lar­gan, the most ex­pen­sive stock on the lo­cal mar­ket, fell be­low the NT$3,000 mark again, end­ing 5.71 per­cent lower to close at NT$2,970.00.

Hon Hai Pre­ci­sion In­dus­try Co. ( ) lost 2.26 per­cent to end at NT$86.50.

Out­per­form­ing the broader mar­ket, PC ven­dor Asustek Com­puter Inc. ( ) rose 9.38 per­cent to close at NT$274.00 af­ter the com­pany re­ported bet­ter-than-ex­pected earn­ings for the sec­ond quar­ter.

“The weaker yuan has led other re­gional cur­ren­cies, in­clud­ing the Tai­wan dol­lar, to move lower,” Huang said.

“The latest selling in the lo­cal eq­uity mar­ket also re­flected fears that for­eign in­vestors will move their funds out of the re­gion due to the weak­ness of the re­gional cur­ren­cies, which could fur­ther hurt share prices,” he said.


A woman mon­i­tors the Tai­wanese stock mar­ket in Taipei, yesterday. Firms de­pen­dent on the Chi­nese mar­ket, such as Ap­ple Inc., are reel­ing from the im­pact of the Chi­nese yuan plunge. Mean­while, the de­val­u­a­tion of the New Tai­wan Dol­lar has af­fected shares of lo­cal firms like Fubon Fi­nan­cial Hold­ing Co. ( ). The lo­cal in­dex Taiex de­creased by 110.76 points to close be­low 8,300.

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