Shares in Taiwan took a beating Friday, ending more than 1 percent lower as sentiment was affected by rising geopolitical tensions after the United States dropped a powerful bomb in Afghanistan earlier in the day, dealers said.
▲圖／翻攝自中國郵報
Asian shares fell Friday as investors fretted over rising geopolitical tensions, especially the situation on the Korean Peninsula. Many markets around the world were closed for Good Friday holidays.
Tokyo's Nikkei 225 lost 0.5 percent to 18,335.63 and South Korea's Kospi slipped 0.6 percent to 2,134.88. The Shanghai Composite index dropped 0.9 percent to 3,246.07. Markets in Hong Kong, Singapore and other Southeast Asian countries were closed. Markets in Europe and the U.S. were shut for the Good Friday holiday.
Analysts said investors were seeking safe havens on concern North Korea may be planning a nuclear test. As it prepares for the 105th anniversary of the birth of its founder Kim Il Sung on Saturday, North Korea has intensified its rhetoric, warning of strong retaliation against any aggression as the U.S. and South Korea hold joint-military exercises.
"Geopolitics seemed to dominate over the past week with the ramifications of the U.S.' missile strike on Syria still reverberating and tensions around North Korea steadily building," Shane Oliver, chief economist at AMP Capital, said in a commentary. "The issues around Syria are likely to settle down assuming U.S. involvement does not escalate, but North Korea is more risky."
Selling was seen in many large-cap stocks across the board in Taiwan, led by contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) after its cautious second-quarter sales estimate, dealers said.
However, smartphone camera lens supplier Largan Precision Co. (大立光) gave some support to the broader market, after it reported a record high of gross margin for the first quarter, dealers said.
The weighted index on the Taiwan Stock Exchange closed down 103.75 points, or 1.05 percent, at 9,732.93, after moving between 9,730.94 and 9,808.33. Turnover totaled NT$86.46 billion (US$2.84 billion) during the session.
The market opened 0.31 percent lower in a knee-jerk reaction to a falling Wall Street, where the Dow Jones Industrial Average closed down more than 130 points overnight after the U.S. dropped its biggest non-nuclear bomb on ISIS targets in Afghanistan, dealers said.
Before the military action in Afghanistan, the U.S. launched 59 Tomahawk cruise missiles on Syria in response to a deadly chemical attack in a rebel-held area and deployed the USS Carl Vinson aircraft carrier and its battle group to waters off the Korean Peninsula, reportedly to deter North Korea's nuclear ambitions.
On Friday, worry escalated that the rising geopolitical tensions will take a toll on global financial markets and create greater volatility in the Taiwan market,
"Taiwan, like other regional markets, cannot isolate itself from the global political uncertainty," Ta Ching Securities analyst Andy Hsu said, referring to the losses on the Seoul, Shanghai and Tokyo markets.
"Few investors can be sure how long such unfavorable geopolitics will last so they rushed to cut their holdings in local shares in a bid to avoid further losses down the road," he said.
Hsu said that liquid large-cap stocks were targeted by investors, with TSMC leading the downturn after the world's largest chip maker on Thursday forecast an 8-9 percent quarterly decline in its second-quarter consolidated sales, citing the slow season and a stronger Taiwan dollar.
TSMC, the most heavily weighted stock on the local market, fell 1.31 percent to close at NT$189.00 with 30.70 million shares changing hands.
The stock dragged down the bellwether electronics sector and the semiconductor sub-index 0.93 percent and 1.27 percent, respectively.
"I am not particularly worried about TSMC's outlook after the second quarter," Hsu said. "I agree with its forecast of a strong comeback in the third quarter, which is usually a peak season for the semiconductor industry," Hsu said.
Meanwhile, Largan, a supplier to Apple Inc., bucked the downturn on the broader market, rising 8.84 percent to end at NT$4,800.00 after the smartphone camera lens maker reported a record high gross margin of 70.9 percent for the second quarter, up from 70.72 percent a quarter earlier.
Also in the high-tech sector, Hon Hai Precision Industry Co. (鴻海), the world's largest contract electronics maker, fell 1.83 percent to close at NT$96.70, and PC brand Asustek Computer Inc. (華碩) shed 1.55 percent to end at NT$286.00.
The financial sector closed down 1.18 percent as investors dumped financial stocks, after banking stocks fell on Wall Street overnight, Hsu said.
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