Taiwan Shares Decline Most in Two Months After IPhone 7 Launch

(Bloomberg) -- Taiwanese shares declined the most in two months as suppliers to Apple Inc. slumped in the wake of the new iPhone launch. The island’s currency fell the most since June.

The Taiex index slid 1.1 percent to 9,164.88, paring this week’s advance to 2 percent. Taiwan Semiconductor Manufacturing Co., the Apple supplier with the biggest weighting on the gauge, fell for a second day from a record high. Apple shares dropped the most in more than two months in U.S. trading Thursday. The Taiwan dollar weakened 0.7 percent to NT$31.51 against the greenback.

Apple’s component suppliers have driven recent equity gains in Taiwan amid expectations for a boost to sales after the iPhone 7’s launch, pushing the Taiex index to a 14-month high on Thursday. TSMC, a custom chipmaker, issued a better-than-expected sales outlook in July ahead of the smartphone’s introduction. Local equities have attracted more than $8.4 billion since July 1, the largest inflow among nine Asian markets tracked by Bloomberg.

“The new iPhone doesn’t bring any revolutionary changes, so investors took profits on these trades,” said Angela Hsieh, an economist at Barclays Plc in Singapore. The benchmark equity gauge has “already reached a somewhat psychological” resistance at 9,200, she said.

The iPhone 7 that Apple unveiled on Wednesday includes camera upgrades, a faster processor and a new water and dust-resistant design, with the company ditching headphone jacks to make room for other features. Breaking with tradition, the world’s most valuable company said on Thursday it won’t provide opening weekend sales numbers for new iPhone launches as “initial sales will be governed by supply, not demand.” Apple will start taking pre-orders on Friday while shipments will begin Sept. 16.

TSMC retreated 1.9 percent and was the biggest drag by points on the benchmark equity gauge, while Hon Hai Precision Industry Co., another Apple vendor, slid 1 percent. The Taiex index has risen 9.9 percent this year and trades at 13.9 times its projected 12-month earnings, compared with 12.6 times for the MSCI Emerging Markets Index.

The yield on 10-year government bonds rose two basis points to 0.68 percent and the five-year yield added one basis point to 0.53 percent, Taipei Exchange prices show.

To contact the reporter on this story: Kyoungwha Kim in Hong Kong at kkim19@bloomberg.net. To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Phani Varahabhotla, Robin Ganguly