Taiwanese shares marked their heaviest weekly drop in three months, while its currency slumped to an eight-year low as investors sold technology stocks amid worries about trade tensions between U.S. and China.
Washington is considering tougher curbs for exports of advanced semiconductor technology to China, according to a report this week.
As investors cashed out of Asia’s most valuable listed company TSMC and other local chip stocks, Taiwan’s benchmark index fell 2.3% on Friday, and lost more than 4% this week.
MSCI’s broadest index of Asia-Pacific shares outside Japan, in which TSMC has an 11% weightage, was down 1.7% to its lowest level since early July.
The Taiwanese dollar slipped to its weakest level since May 2016, and was last down about 0.4% at 32.730.
A resilient U.S. dollar and heightened expectations that Donald Trump could become the next U.S. president were also at play.
“The U.S. election continues to be one of the main factors for volatility as protectionist policies… advocating broad tariff increases may pose geopolitical risks, as well as risks to global trade,” Jeff Ng, head of Asia macro strategy at SMBC said.
“Trade-vulnerable currencies may be impacted by this, like the Taiwanese dollar,” he said, adding that concerns around the country’s export growth outlook could also be a potential factor.
The dollar index was last trading at 104.260 against a basket of major currencies, and was poised to snap a two-week losing streak.
Equities in South Korea, home to chipmaking giants SK Hynix and Samsung Electronics, fell 1% to mark their worst session since late May.
Indonesia’s rupiah fell as low as 16,220 per dollar, and was last trading 0.3% down at 16,190, despite the central bank intervening in the market on Thursday. It has lost nearly 5% so far this year.
“Over the next three months (there’s) likely to be a little bit of uncertainty in terms of the rupiah and BI (Bank Indonesia) will continue to be in the market,” said Michael Wan, senior currency analyst at MUFG.
Indonesia is unique in that its central bank targets currency stability as part of its mandate and it has stood in the market over recent months to defend the rupiah against a stubbornly strong U.S. dollar. Stocks in Jakarta fell 0.7%.
In other regional markets, Singapore stocks slipped 0.8%, while the Philippine benchmark rose 1.5%, hovering around its highest level since early April.
HIGHLIGHTS:
** China pledges to expand tax sources for local govts, party official says
** Malaysia stocks soar on AI-driven building boom
** Japan cuts growth forecast, prime minister warns of weak-yen pain – Reuters