World’s worst stock rout deepens in Taiwan


The Taiwan Stock Exchange Weighted Index slid as much as 4.2% in Taipei as authorities urged companies to allow staff to work from home or split locations after reporting a record 206 new local cases Sunday.

TAIPEI: Taiwan stocks slumped, extending their biggest rout in more than a year, as the government tightened restrictions on people and businesses to control its worst outbreak of the coronavirus.

The Taiwan Stock Exchange Weighted Index slid as much as 4.2% in Taipei as authorities urged companies to allow staff to work from home or split locations after reporting a record 206 new local cases Sunday.

The benchmark gauge sank 8.4% last week on concern about the impact on growth, the most since March 2020, turning Taiwan stocks into the world’s worst performers so far this month.

Forced selling may add volatility to yesterday’s trading, with the level of margin debt falling by a net NT$5.8bil (US$207mil or RM854mil) on Friday, according to exchange data compiled by Bloomberg.

That took the four-day drop in leverage to NT$39.4bil (RM5.8bil), showing traders faced margin calls by brokers to cover losses in their stock accounts.

The sharp reversal in Taiwan stocks is a warning to highly leveraged investors around the world.

The Taiex was the world’s best performing equity gauge in the three years through April, surging almost 80% in US dollar terms, as a seemingly never-ending rally in tech shares pulled in retail investors.

“In light of rising concerns over the pandemic, we expect more volatility ahead, and advise to stick to defensive names with low P/E and high dividend yield, ” said Patrick Chen, CLSA’s head of Taiwan Research. His team’s top picks include Taiwan Semiconductor Manufacturing Co and Hon Hai Precision Industry Co.

Travel and consumption-linked names were among the big losers in the market. Restaurant operators Gourmet Master Co and Wowprime Corp plunged almost 10% each, while shares of Formosa International Hotels Corp and The Ambassador Hotel slumped at least 5% each. — Bloomberg

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