Highlights

China Steel (2002-TW) has witnessed significant stock declines due to persistent issues with its investment in Hsing Ta Marine, along with market anxieties spurred by upcoming Federal Reserve actions. The stock has hit its lowest point in over four years, breaking the NT$20 mark. This downturn is marked by 12 consecutive days of selling by foreign investors, reflecting broader industry and economic challenges.

Sentiment Analysis

• The sentiment surrounding China Steel's current market performance is negative, mainly driven by the persistent foreign selling and operational challenges within its investments.
• Uncertainties in global markets and domestic challenges further amplify negative feelings, as reflected in the ongoing share price reduction.
• However, some speculative optimism exists, balanced by recent small buying from investment trusts.
• The Federal Reserve's indications of slowing rate cuts add a cautious note to investor sentiment.

Article Text

China Steel (2002-TW) is currently facing a downturn in stock performance as it faces numerous economic and operational challenges. The company has struggled with significant financial issues from its investment in Hsing Ta Marine, which threatens to cease operations due to ongoing losses. These issues are compounded by the short-term adjustments in the steel market and signals from the Federal Reserve regarding a slower pace of interest rate cuts, impacting investor confidence.

Hsing Ta Marine had been a pivotal player in localizing offshore wind energy infrastructure but stumbled due to unanticipated learning curves, pandemic-related complications, labor shortages, and consequent high production costs. Further exacerbating the situation, the lack of competitive pricing has hindered its capacity to secure new orders, leading to a reported potential shutdown post the lunar New Year.

Externally, even with international economies showing signs of recovery and a gradual rebound in the steel market, the sector faces traditional Q1 sluggishness due to the New Year holidays and market hesitancy stemming from the global political climate. Particularly, the anticipated effects of policy shifts in China and the United States introduce an additional layer of uncertainty, indicating short-term volatility in the steel market.

While the Federal Reserve recently executed a rate cut as anticipated, comments from Chairman Powell hint at a more reserved approach to future monetary policy adjustments, potentially stalling further rate reductions. This announcement has adversely affected market confidence, leading to selling pressure on China Steel's stocks.

Since December, China Steel's shares have consistently lost value, with share prices dipping below NT$20 to NT$19.8—the lowest since the onset of the COVID-19 pandemic in August 2020. Analysis of major shareholder movements reveals persistent sell-offs by foreign investors for 12 days consecutively, totaling 91,400 shares. Domestic traders have mirrored this trend, though investment trusts displayed a reversal with the recent acquisition of 1,516 shares over two days.

Key Insights Table