Taiwan Stocks Fall as Officials Extend Soft Lockdown Island-Wide
(Bloomberg) -- Taiwan’s stocks dropped after officials on Wednesday expanded pandemic-linked restrictions to the entire island to quell the recent surge in Covid-19 cases.
The Taiwan Stock Exchange Weighted Index closed 0.6% lower. The government extended soft lockdown measures like capping social gatherings and closing schools and other venues that were previously limited to the greater Taipei area. The benchmark has tumbled nearly 9% since its late April peak amid Taiwan’s worst outbreak of the coronavirus, putting it among the world’s worst performers this month.
On Thursday China Steel Corp. was the biggest drag on the index with a decline of 7%. United Microelectronics Corp. dropped 3.7%.
Investors fear that the recent surge - and increasing probability of a hard lockdown - could hit the heart of the world’s advanced computer chips supply. The government on Tuesday pledged to try and keep production of such chips running and its health minister expressed confidence Wednesday Taiwan will not enter a hard lockdown.
While infections in semiconductor hubs of Hsinchu and Taichung have so far been contained, a pick up in cases could further hit the global semiconductor supply chain also under pressure from the domestic drought, Ho Woei Chen, an economist at United Overseas Bank, wrote in a note.
Meanwhile, Citigroup Inc. analysts added that there would be limits to operational efficiency for the semiconductor industry if restrictions are further increased, given curbs on people movement and other logistics.
A full lockdown could be imposed if local infections average 100 or more for 14 days, with an unclear source for at least half of those, according to the Centers for Disease Control. Taiwan reported 267 new local infections on Wednesday.
On Thursday, Taiwan reported another 286 locally transmitted cases of Covid-19, but it’s able to trace the source of most infections and so still doesn’t see a need for a full lockdown.
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