Taiwan’s stocks suffer market jolt as China’s zero-Covid policy and lockdown disrupt supply chains from PCs to vehicles

Taiwan’s major electronics manufacturers and chip makers are slumping in the stock market as they grapple with supply chain disruptions amid the ongoing lockdowns in Shanghai and its neighbouring cities.

The shares of Hon Hai Precision Industry, Pegatron Corp, Quanta Computer, Compal Electronics and AU Optronics, five of Taiwan’s bellwether electronics suppliers, retreated by 8.5 per cent on average in April, erasing a total of NT$118 billion (US$4 billion) in market capital. TAIEX, the Taiwan Stock Exchange’s benchmark weighted index, dropped 6.5 per cent to a six-month low of 16,592 last month.

In other major markets, Hon Hai’s subsidiary Foxconn Interconnect Technology, lost 12.8 per cent in Hong Kong, while Taiwan Semiconductor Manufacturing Co. (TSMC) retraced 10.9 per cent in New York during the month.

One in four of the 161 Taiwan-listed companies that halted production amid ongoing Covid-19 lockdowns in Shanghai and in the neighbouring city of Kunshan in Jiangsu province are in electronics, said Chang Chen-shan, an official at Taiwan’s Financial Supervisory Commission. The suspensions have spilled over to other manufacturing activities from bicycles to automobiles.

The spillover underscores why Taiwan’s government had been nudging the island’s companies for many years to diversify their investments from mainland China to Southeast Asia to reduce the reliance of vital supply chains on China.