Fed Adopts Hawkish Stance; Investment Advisors Warn of Pre-Dragon Boat Festival Selling Pressure on Taiwan Stocks

Central News Agency Report

(Taipei, June 18 — Reporter Wu Chia-Hao) The U.S. Federal Reserve (Fed) kept interest rates unchanged but substantially revised inflation forecasts upward, prompting declines in all three major U.S. stock indices. However, Taiwan Semiconductor Manufacturing Company (TSMC) American Depositary Receipts (ADR) rose 1.48%, bucking the downward trend. Investment advisory firms noted that while geopolitical risks have eased, stabilizing global investor sentiment, Taiwan's stock market faces short-term funding pressure due to the Fed's hawkish stance, urging caution over potential pre-Dragon Boat Festival selling pressure.

On June 17, the Dow Jones Industrial Average dropped 507.12 points (0.98%) to close at 51,492.55. The S&P 500 fell 91.25 points (1.21%) to 7,420.10, and the tech-heavy Nasdaq Composite declined 354.69 points (1.34%) to 26,021.66. In contrast, the Philadelphia Semiconductor Index rose 182.85 points (1.38%) to 13,477.07.

In Taiwan, the futures market settled on the 17th. Supported by gains in plastics and financial stocks, the Taiwan stock market reversed earlier losses to close higher. The weighted index rose 68.2 points to 45,877.39, with a total trading value of NT$1.102051 trillion. Institutional investors collectively sold NT$25.593 billion, with domestic dealers selling NT$4.297 billion (ending a three-day buying streak), investment trusts selling NT$640 million (ending a 13-day buying streak), and foreign and mainland Chinese investors selling NT$20.656 billion (ending a three-day buying streak).

Regarding economic outlook, the Cathay-National Taiwan University team revised Taiwan's 2024 GDP growth forecast from 5.8% to 10.1%, citing continued upward revisions in AI infrastructure capital expenditures, record-high stock markets, and recovering tourism. They also anticipate the Central Bank of Taiwan will hold interest rates steady at its June 18 board meeting.

Recent market rumors suggest Cathay Financial and China Trust Financial may acquire SinoPac Financial. SinoPac CEO Chu Shih-Ting stated during a June 17 investor briefing that he could not comment on 'folklore rumors.'

Hsing Fu Fa Construction held its annual shareholder meeting on the 17th. Spokesperson Liao Chao-Hsiung stated that the toughest period for the real estate market has passed. However, with the stock market remaining overheated and drawing capital away, he expects no significant recovery in the property market within the next six months. (Edited by Lin Chia-Hsien) 1150618