Traders dump TSMC, Samsung in worst day in Asia tech since March

TAIPEI • Asia technology shares slumped yesterday as investors reacted to a series of negative events from the simmering China-US trade tensions to stretched valuations in the sector.

The MSCI Asia Pacific Information Technology Index slipped as much as 3.3%, the most intraday since March 23. Taiwan Semiconductor Manufacturing Co (TSMC), which has the biggest weighting on the index, slid as much as 6.2%, while Samsung Electronics Co Ltd, another heavyweight, ended 4.2% lower after Nvidia Corp suggested the growth of its data centre business will slow.

There’s been “a euphoric demand” for tech stocks so far amid the spread of Covid-19 but the US Federal Reserve’s (Fed) minutes, which didn’t contain further monetary measures, disappointed investors holding the expensive stocks, according to Nader Naeimi, head of dynamic markets at AMP Capital Investors Ltd.

“Following the liquidity-driven rally recently, what we now see is disappointing comments from the Fed, US ban on Huawei — which may cause a retaliation from China and falling prices of memory chips,” according to Chung Chang-won, an analyst at Nomura Financial Investment (Korea) Co Ltd. “For those reasons, people are selling tech shares today.”

A report that Huawei and ZTE Corp will delay the deployment of 5G wireless network base stations helped fuel yesterday’s drop in Taiwan, said Diana Wu, a senior manager at Capital Securities Corp. The US this week slapped fresh restrictions on Huawei, triggering a slump in some suppliers listed on the island.

Taiwan’s stock benchmark ended the session down 3.3% after tumbling as much as 5%. The gauge breached its 1990 peak last month to set a record high. — Bloomberg