Taiwan Shares Fall Most in Two Months on U.S. Rate-Hike Prospect

  • Decline follows selloff in U.S. on speculation rates will rise
  • Big caps are biggest drags on concern fund flows may reverse

Taiwan shares fell the most in two months as big-cap stocks slumped on increased prospects for interest-rate hikes in the U.S., prompting concern foreign investors might pull funds from the island.

The Taiex index dropped 1.2 percent to close at 9,053.69, the steepest decline since July 6. Taiwan Semiconductor Manufacturing Co., an Apple supplier with the biggest weighting on the gauge, declined for a third day. The Taiwan dollar weakened as much as 0.4 percent against its U.S. counterpart. Taiwan’s financial markets were open Saturday to make up for an additional holiday scheduled for Sept. 16, the day after the Mid-Autumn Festival.

Taiwan stocks have attracted the most fund inflows among major Asian markets this year amid relatively high dividend yields. Increases in U.S. interest rates could reduce the allure of the island’s equities. U.S. stocks fell in the worst sell-off yesterday since Britain voted to leave the European Union, after a Federal Reserve official signaled that the central bank may be closer to a rate hike.

“Taiwan shares fell after U.S. stocks plunged, with interest-rate hikes being an issue,” Alan Tseng, Taipei-based vice president at Capital investment Management Corp., said by phone. “If the Fed raises rates, the U.S. dollar index will rise, Taiwan dollar will weaken, and foreign investors will take profit on Taiwan shares.”

Taiwan Semiconductor fell 0.8 percent to close at NT$178. Largan Precision Co., the highest-priced publicly traded stock in Taiwan, was declined 4.3 percent to NT$3,450.

Earlier this week, the Taiex index closed at its highest level since July 2015 amid fund inflows. Foreign investors sold a net NT$7.58 billion ($241 million) worth of Taiwan shares Friday, the first net sale since Sept. 1.