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Taiwan Stock Market Drops Amid US-Iran Tensions

Strategic Insights

— 1 min read

Investors in Taiwan reacted to reports of US strikes on Iranian nuclear facilities, sending the stock market lower on Monday. The Taiwan Capitalization Weighted Stock Index, or TAIEX, dropped 313.72 points to end at 21,732.02. This decline was led by a 3.32% drop in TSMC, a key semiconductor manufacturer. However, several semiconductor equipment-related stocks gained, including Gallant Precision Machining and LandK Engineering, which benefited from an order backlog valued at NT$200 billion. The market's focus on high-end substrate materials and cleanroom engineering also remained strong.

Key Takeaways:

  • The Taiwan stock market closed lower on Monday due to US-Iran tensions, with a decline of 313.72 points in the TAIEX.
  • TSMC, a key semiconductor manufacturer, fell 3.32% to NT$1,020, dragging the broader index down by 282 points.
  • Several semiconductor equipment-related stocks gained, including Gallant Precision Machining, Gallant Micro Machining, and LandK Engineering.
  • Cleanroom engineering firm LandK Engineering reached a new high amid active trading, supported by reports of an order backlog valued at NT$200 billion.
  • Investor focus was also strong on high-end substrate materials used in chip packaging, with Unimicron and Wus Printed Circuit closing at the daily limit.
  • Shipping and logistics stocks were under pressure due to Iran's parliament approving a proposal to block the Strait of Hormuz.
  • Analysts expect the market to enter a short consolidation phase following recent gains, with the duration of this period dependent on Iran's national security council proceeding with closing the strait.
  • Historically, markets have recovered from geopolitical crises, with rebounds in Taiwan and US stock markets gaining between 8% and 20% following previous conflicts.

Statistics:

  • TAIEX: 313.72-point decline, 3.32% drop in TSMC, NT$308 billion (US$10 billion) turnover.
  • TSMC: 3.32% drop to NT$1,020, dragging the broader index down by 282 points.
  • Gallant Precision Machining: reached daily price limit.
  • Gallant Micro Machining: reached daily price limit.
  • LandK Engineering: reached a new high, with an order backlog valued at NT$200 billion.
  • Unimicron: closed at daily limit, essential for connecting semiconductor chips to printed circuit boards in advanced packaging.
  • Wus Printed Circuit: closed at daily limit, involved in manufacturing Ajinomoto Build-Up Film (ABF) substrates.

Sources:

  • CNA
  • CTEE
  • Taishin Securities Investment Advisory
  • Huang Wen-ching, Vice President of Taishin Securities Investment Advisory
  • Chiang Kuo-chung, analyst

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