Taiwan, S.Korea shares fall on Sino-US chip tensions

Reuters

Taiwan, S.Korea shares fall on Sino-US chip tensions

18Jul2024546 GMT

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Taiwan stocks fall most since mid-April

S.Korean shares hit more than 2-week low

Rupiah slips a day after rising 0.5%

Japan's yen at six-week high, Nikkei down 2%

By Shivangi Lahiri

July 18 (Reuters) -Technology-heavy stock indexes of South Korea and Taiwan fell sharply on Thursday, after reports that the United States was mulling tighter curbs on exports of advanced semiconductor technology to China triggered a sell-off in chip stocks.

Currencies in emerging Asian markets were largely mixed. The Indonesian rupiah IDR= fell 0.4%, giving up most of its gain made on Wednesday when the central bank left its interest rate unchanged.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell as much as 1% in its fourth straight session of declines. Shares in South Korea .KS11 weakened as much as 1.5% to hit their lowest in more than two weeks.

Equities in Taiwan .TWII fell 2.6% to post their biggest intraday drop since mid-April, with chip-making giant TSMC 2330.TW shedding over 4%.

"There are huge risks of increased tariffs on China and the China region, and now on the chip sector," said Jessica Amir, a markets strategist, at investment and trading platform Moomoo.

"This means the chip sector could succumb to even more profit-taking, remembering investors are rotating out of mega-cap tech, clipping profits off the table and going into small caps anyway given the Fed is now likely to cut rates two-three times this year."

Elsewhere, Indonesian shares .JKSE jumped 1.2% to mark their biggest intraday gain since late June, boosted by utilities and banks, while Philippine .PSI and Singapore stocks .STI edged lower.

Among currencies, the South Korean won KRW=KFTC and Taiwan's dollar TWD=TP edged higher. The Thai baht THB=TH and Malaysian ringgit MYR= edged lower, while the Singapore dollar SGD= was largely flat.

In Japan, the Nikkei .N225 fell 2% amid a global sell-off in chip stocks, while the yen JPY=EBS scaled a six-week high against the dollar with data suggesting authorities might have bought nearly 6 trillion yen last week.

"A violent move downwards is not unexpected in such a scenario given how stretch short JPY positions are," analysts at Maybank wrote.

"Fundamentally, yield differentials are still wide and therefore, we expect the USDJPY to eventually rebound upwards again further into 3Q 2024."

HIGHLIGHTS:

** Prabowo's nephew to be appointed Indonesia deputy finmin, his party says

** Bank of Korea extends lending support for small, mid-sized firms

** JGB yields rise as investors grow cautious of possible July rate hike

** Malaysia's June exports rise 1.7% on-year, below forecast

Asian stock indexes and currencies at 0506 GMT
COUNTRY	FX RIC	FX DAILY %	FX YTD %	INDEX	STOCKS DAILY %	STOCKS YTD %
Japan	JPY=	-0.11	-9.77	.N225	-2.15	20.15
China	CNY=CFXS	+0.08	-2.20	.SSEC	-0.12	-0.53
India	INR=IN	-0.01	-0.46	.NSEI	0.11	13.38
Indonesia	IDR=	-0.35	-4.69	.JKSE	1.02	0.35
Malaysia	MYR=	-0.06	-1.57	.KLSE	-0.10	12.19
Philippines	PHP=	+0.07	-4.88	.PSI	-0.08	3.61
S.Korea	KRW=KFTC	-0.01	-6.76	.KS11	-1.37	5.61
Singapore	SGD=	+0.03	-1.59	.STI	-0.64	7.00
Taiwan	TWD=TP	+0.04	-5.73	.TWII	-2.11	29.77
Thailand	THB=TH	-0.14	-4.98	.SETI	0.25	-6.55