Highlights

Taiwan's stock market is seeing considerable sell-off from foreign investors, with a reported sell of NT$38.8 billion, causing the index to tumble. Forecasters are worried about rising inflation due to expected energy price hikes. Additionally, the new U.S. tariffs on automobiles are expected to have modest direct effects, but could disrupt Taiwan's broader economic stability.

Sentiment Analysis

• The sentiment surrounding the current state of Taiwan's stock market is primarily negative, driven by significant foreign capital outflow and concerns about future inflation.
• Political and economic factors, such as U.S. tariffs and projected energy price increases, add pressure on market sentiment.
• The U.S. tariffs on automobiles introduce uncertainty, although the direct impact on Taiwan’s automotive industry is limited, as highlighted by industry experts.

Article Text

On March 28, Taiwan's stock market faced turbulence as foreign investors sold NT$38.8 billion worth of stocks, marking a substantial sell-off over two consecutive sessions. This event coincided with the U.S. President Donald Trump's announcement of a significant increase in automobile tariffs, which led to a decline of 308.53 points or 1.39% in the Taiwanese stock index, closing at 21951.76 points with a trading volume of NT$263.89 billion. Key players such as Foxconn and TSMC saw major sell-offs, with over 30,000 and 10,000 shares sold, respectively.

The tariff announcement has cast a shadow over Taiwan's financial markets, causing both stock and currency values to drop on March 27. The New Taiwan dollar (NT$) weakened against the U.S. dollar, falling below the 33.1 mark. This decline, however, was mitigated by interventions from Taiwan’s central bank, leading to a closing rate of NT$33.103. Despite these challenges, the sale of foreign exchange saw an increase in total turnover to $1.471 billion.

Statements from the automobile industry urged the government to exercise caution when setting tariff policies to avoid unintended consequences across the supply chain. Although the new U.S. tariffs, set at 25%, were not deemed significantly harmful to Taiwan's complete vehicle sector, there was concern about potential indirect impacts.

Economic indicators from Taiwan show mixed signals. The National Development Council reported that Taiwan's economic barometer gained 2 points to 37 in February, reflecting a sustained moderate growth. However, the Consumer Confidence Index dropped to 71.86 in March, marking the lowest since May of the previous year, largely driven by expectations of imminent electricity price hikes and increased inflation fears.

This fluctuating economic climate has also seen significant corporate activities. Quanta Computer and ASE Group's expansion efforts may positively influence associated companies like Shun-On Financial. Moreover, the sale of a factory by Giantplus Technology is anticipated to positively impact earnings by Q2, against the backdrop of broader market anxieties.

Key Insights Table