Category: Market

Taiwan’s foreign exchange reserves rose to a record high at the end of August, on increased returns from the central bank’s portfolio management, according to the bank.

Central bank data released on Monday showed the country’s total forex reserves at US$543.58 billion as of the end of August, up US$502 million from a month earlier.

The U.S. dollar index, which tracks the greenback value against the six other currencies of Washington’s major trading partners, rose 0.5 percent in August when the non-U.S. dollar assets were converted into U.S. dollar terms, and the value of those assets in Taiwan’s forex reserves fell accordingly, said Tsai Chiung-min (???), head of the bank’s Foreign Exchange Department.

The central bank’s management of its portfolio, however, brought increased returns, which boosted Taiwan’s forex in August despite the effects of a stronger U.S. dollar, Tsai said.

With the increase in August, Taiwan cemented its place as the fifth largest forex reserve holder in the world, after China with US$3.24 trillion in July, Japan (US$1.30 trillion in July), Switzerland (US$1.02 trillion in July), and India (US$571.6 billion in August), the central bank said.

Meanwhile, as of the end of August, the value of foreign investor holdings in Taiwan stocks and bonds and Taiwan dollar-denominated deposits was US$719.7 billion, up from US$698.30 billion a month earlier, the bank said.

Those holdings represented 132 percent of Taiwan’s total foreign exchange reserves as of the end of August, up 3 percentage points from the previous month, the central bank data showed.

Tsai said the recovery of the local main board in late August from its losses earlier in the month helped drive up the value of assets held by foreign institutional investors.

In August, the weighted index on the Taiwan Stock Exchange rose 242.88 points, or 1.41 percent, from July.

In addition, foreign institutional investors recorded a net fund inflow of US$489.7 billion in August, stopping a net outflow for the second consecutive month, according to the Financial Supervisory Commission.

The central bank has said it will maintain ample forex reserves to keep domestic financial markets stable and guard against any sudden movement of funds out of the country by foreign institutional investors.

Source: Focus Taiwan News Channel

Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., reported Sunday that its sales hit a seven-month high in August, which analysts attributed to the efforts by the company’s clients to build inventories before the launch of new products.

In a statement, Largan said it posted NT$4.012 billion (US$145 million) in consolidated sales in August, up 5.49 percent from a month earlier and the highest since January, when its revenue was NT$4.61 billion.

The August figure, however, was 20.29 percent lower than a year earlier, which according to analysts was due mainly to a loss of orders from Huawei Technologies Co. after the Chinese company was hit by United States’ sanctions, effective in mid-September 2020.

In the first eight months of 2021, Largan’s consolidated sales totaled NT$29.75 billion, down 16.28 percent from a year earlier, largely on the back of trade tensions between the U.S. and China that led to the sanctions against Huawei.

In August, lenses 20 megapixels and over, which have a higher profit margin, accounted for 10-20 percent of Largan’s total sales, according to the statement.

Those 10-20 megapixels accounted for 40-50 percent of the company’s sales, and 8-10 megapixel lenses made up 10 percent, while other products such as voice coil motors contributed 30-40 percent, the statement showed.

The August sales were in line with the guidance given by Largan CEO Adam Lin (???), who had projected a monthly sales increase in August and September.

Lin said, however, that the smartphone lens industry remained haunted by a shortage of raw materials, which would compromise shipment growth. He anticipated that low-end smartphone lenses would dominate the market in the third quarter.

At an annual general meeting in late August, Largan’s shareholders approved a proposal to allow the company to issue dividends twice a year instead of once.

According to analysts, that decision was made in a bid to encourage investors, in particular foreign institutional investors, life insurance companies and other institutions, to hold onto the company’s shares for longer periods of time.

Last week, Largan issued NT$91.5 in cash dividend per share on its 2020 earnings per share, which stood at NT$182.90. The cash dividend per share translated into a payout ratio of 50.03 percent, marking the first time in seven years the company had proposed a payout ratio of more than 50 percent.

In addition, Largan has decided to set up a subsidiary, at a cost of NT$1 billion, to raise its efforts to tap into the booming automotive electronics market.

Source: Focus Taiwan News Channel

Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) continued to command more than 50 percent of the global pure wafer foundry market in the second quarter of this year, according to Taipei-based market information advisory firm TrendForce Corp.

In a research paper, TrendForce said TSMC generated US$13.30 billion in sales in the second quarter, up 3.1 percent from a quarter earlier, to take a 52.9 percent share of the global market.

TSMC’s second quarter market share was down from its 54.5 percent in the first quarter, but the company still remained the world’s largest contract chipmaker, TrendForce said.

The company’s sales growth was compromised by interruptions in the power supply in southern Taiwan in April and May, which impacted production of the chipmaker’s eight-inch chips in the Southern Taiwan Science Park, TrendForce added.

South Korea’s Samsung Electronics Corp. was in second place with a market share of 17.3 percent, down from 17.4 percent in the first quarter, according to TrendForce.

The advisory firm said Samsung posted US$4.33 billion in sales in the second quarter, up 5.5 percent from a quarter earlier on the back of strong demand for 5G applications and drive ICs used in flat panels despite a production cut in its Texas plant due to blizzards, TrendForce said.

United Microelectronics Corp. (UMC), Taiwan’s second largest contract chipmaker, saw its global market share rise to 7.2 percent in the second quarter from 7.1 percent in the first quarter and remained the third largest contract chip maker in the world, due to its higher production utilization rate, the advisory firm said.

UMC posted US$1.82 billion in sales in the April-June period, up 8.5 percent from a quarter earlier, the advisory firm added.

U.S.-based GlobalFoundries Inc. took fourth spot in the second quarter after generating US$1.52 billion in sales, up 17 percent from a year earlier, accounting for 6.1 percent of global total revenue, TrendForce said.

In the same three month period, China’s Semiconductor Manufacturing International Corp. (SMIC) posted US$1.34 billion in sales, up 21.8 percent from a quarter earlier to take a 5.3 percent share of the global market, TrendForce added.

China’s Huahong Group posted US$658 million in sales to take a 2.6 percent share of the world market, making it the world’s sixth largest contract chip maker, in the second quarter, followed by Taiwan’s Powerchip Semiconductor Manufacturing Corp. (PSMC) and Vanguard International Semiconductor Corp. (VIS) ranked No. 7 and No.8. according to the research note.

PSMC posted US$459 million in sales in the second quarter, accounting for 1.8 percent of the global total, while VIS generated US$363 million in revenue, accounting for 1.4 percent of the total, TrendForce said.

Israel’s Tower Semiconductor Ltd. came in ninth with US$362 million in sales in the second quarter ahead of South Korea’s DB HiTek Co Ltd., which posted US$245 million in sales, TrendForce added.

TrendForce said riding the wave of a supply shortage, contract chipmakers are expected to see their production capacity fully booked in the third quarter and sales are expected to top the levels seen in the second quarter.

Source: Focus Taiwan News Channel

Taiwan’s central bank governor Yang Chin-long (???) failed to secure his third consecutive top grade in 2021, according to an annual report issued by the New York-based Global Finance magazine.

In the Central Banker Report Cards 2021 — released by the magazine on Wednesday, Yang earned an “A-” grade for this year, stopping the two-year streak when he received the top “A” grade in 2019 and 2020 after assuming his post on Feb. 26, 2018.

The magazine said its “A” to “F grading is based on success in areas such as inflation control, economic growth goals, currency stability and interest rate management.

The magazine added “A” represents an excellent performance down through “F” for outright failure.

Yang was ranked on the same level with U.S. Federal Reserve Chair Jerome Powell in the 2021 report, according to Global Finance.

In addition to Yang and Powell, Colombia’s Leonardo Villar Gomez, Georgia’s Koba Gvenetadze, Israel’s Amir Yaron, Malaysia’s Nor Shamsiah Mohd Yunus, Mexico’s Alejandro Diaz de Leon, New Zealand’s Adrian Orr, Paraguay’s Jose Cantero Sienra, Qatar’s Abdulla Bin Saoud Al-Thani and South Africa’s Lesetja Kganyago also earned an “A-.”

Ranked above the 11 central bank governors, a total of 10 other central bankers in the world earned the top “A” grade in the 2021 report, Global Finance said.

They are Brazil’s Roberto Campos Neto, Bulgaria’s Dimitar Radev, Canada’s Tiff Macklem, Chile’s Mario Marcel Cullell, China’s Yi Gang (??), the Czech Republic’s Jiri Rusnok, Egypt’s Tarek Amer, the European Union’s Christine Lagarde, Kuwait’s Mohammad Yousef Al-Hashel and Morocco’s Abdellatif Jouahr.

The Central Banker Report Cards, published every year by Global Finance since 1994, graded the central bank governors of more than 100 key countries and territories worldwide this year.

“With the pandemic still surging in many areas, and inflation emerging as a major area of concern once again, the world’s central bankers are confronting multiple challenges from multiple directions,” Global Finance publisher and editorial director Joseph Giarraputo said in a statement.

“Global Finance’s annual Central Banker Report Cards show which financial policy leaders are succeeding in the face of adversity and which are falling behind,” Giarraputo added.

Yang has been working at the Taiwan central bank since 1989, serving in its foreign exchange and economic research departments before his appointment as deputy governor in 2008.

His predecessor Perng Fai-nan (???) has the distinction of being the only central banker in the world to have earned the top grade 14 times, gaining straight A’s from 2005-2017.

Source: Focus Taiwan News Channel

Shares in Taiwan extended momentum from a session earlier, rising more than 100 points to close above 17,200 points Friday, as buying rotated to non-tech stocks with the financial sector in focus, dealers said.

However, turnover shrank as many investors stayed on the sidelines, waiting for a speech scheduled by U.S. Federal Reserve Chair Jerome Powell later in the day at the online central banker symposium in Jackson Hole, Wyoming, they said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 142.97 points, or 0.84 percent, at 17,209.93, after moving between 17,000.26 and 17,229.89. Turnover totaled NT$314.87 billion (US$11.28 billion). Thursday’s turnover stood at NT$377.16 billion.

The market opened down 5.85 points and moved into negative territory in the early morning session in the wake of the losses incurred on U.S. markets, where the Dow Jones Industrial Average fell 0.5 percent overnight as Kansas City Fed President Esther George said it is time for the central bank to start to scale down asset purchases, dealers said.

However, the Taiex soon regained its footing as financial and select old economy stocks attracted rotational buying, while contract chipmaker Taiwan Semiconductor Manufacturing Co. kept moving higher on the back of a product price hike to boost the main board further, dealers added.

It was the first time the Taiex closed above 17,200 points since Aug. 12, when it ended at 17,219.94. In the week, the Taiex rose 867.99 points or 5.31 percent.

“Rotational buying helped the broader market offset the impact resulting from U.S. markets,” Concord Securities analyst Kerry Huang said. “Today, the financial sector, a market laggard, became a focus of such buying.”

“With interest rates moving higher at a time of a global economic recovery, financial institutions are expected to benefit from higher returns from their overseas investments,” Huang said.

In the financial sector, which rose 2.09 percent, Cathay Financial Holding Co. rose 3.04 percent to close at NT$57.70, Fubon Financial Holding Co. gained 2.71 percent to end at NT$83.50, Mega Financial Holding Co. added 1.75 percent to close at NT$32.00, and CTBC Financial Holding Co. grew 1.56 percent to end at NT$22.75.

Rotational buying was also active among many old economy stocks, in particular in the petrochemical sector, which rose 1.85 percent on an increase in crude oil prices as a storm approached the Gulf of Mexico.

Among the gaining petrochemical stocks, Formosa Plastics Corp. rose 1.62 percent to close at NT$100.50, and Nan Ya Plastics Corp. gained 2.01 percent to end at NT$86.30.

Elsewhere in the old economy sector, shares in China Steel Corp., Taiwan’s largest steel maker, rose 1.51 percent to close at NT$36.90, and Ta Chen Stainless Pipe Co. added 2.45 percent to end at NT$50.20.

Bucking the upturn, shipping stocks moved lower as financial regulators stepped up their monitoring of day trading, a practice in which investors buy and then sell the same stock or sell and then buy the same stock in one single session. Investors who are keen on day trading favor the shipping industry.

Among the falling shipping stocks, Evergreen Marine Corp., the largest container shipper in Taiwan, fell 1.05 percent to close at NT$141.00, and rivals Yang Ming Marine Transport Corp. and Wan Hai Lines lost 2.14 percent and 2.33 percent, respectively, to end at NT$137.00, and NT252.00.

“TSMC continued to serve as a driver to the gains enjoyed by the main board,” Huang said. “Many investors were encouraged by market speculation that the chipmaker has raised product prices due to a global supply shortage,” Huang said. TSMC declined to comment on the price hike.

TSMC, the most heavily weighted stock on the local market, rose 0.84 percent to close at NT$599.00, but came off a high of NT$600.00.

TSMC’s buying was also reflected among other semiconductor stocks with integrated circuit packaging and testing services provider ASE Technology Holding Co. up 2.83 percent to end at NT$127.00, and IC designer MediaTek Inc. up 0.90 percent to close at NT$869.00.

“Turnover was reduced amid caution ahead of Powell’s speech which will be scoured for more clues about the Fed’s tightening of monetary policy,” Huang said. “So, large cap stocks like TSMC posted limited gains today.”

According to the TWSE, foreign institutional investors bought a net NT$18.23 billion worth of shares on the main board Friday.

Source: Focus Taiwan News Channel

Taiwan’s Cabinet on Thursday approved a proposed 2022 budget of NT$2.2391 trillion (US$80.14 billion) put forth by the central government, which focuses heavily on social welfare funding.

The NT$2.2391 trillion bill represents an annual 9 percent increase but will still leave a deficit of NT$23 billion, as central government spending is forecast to rise by about 5.9 percent in 2022, the Cabinet said.

Of the proposed NT$2.2621 trillion in spending, the largest portion will go to social welfare, with an allocation of NT$601.8 billion, or 26.6 percent of the total, according to the bill.

Education, cultural and science projects will consume 20.1 percent, national defense 15.7 percent, and economic development programs 11.5 percent, the budget proposal shows.

Following the Cabinet’s approval of the budget plan put forth by the Directorate-General of Budget, Accounting and Statistics (DGBAS), the bill is expected to be submitted to the Legislature by the end of the month for review and passage.

In the DGBAS’s proposal, it said that the estimated NT$23 billion budget deficit and NT$96 billion in debt payments will be financed by a NT$50 billion surplus, which had accumulated over the past few fiscal years, and borrowing of NT$69 billion.

As a result of the NT$69 billion in borrowing and a special budget of NT$185.6 billion for emergency and other purposes, the central government’s debt in 2022 will be NT$254.6 billion, the DGBAS said.

The national accumulated outstanding debt, meanwhile, will total NT$6.4197 trillion in 2022, down 0.9 percentage points from this year, accounting for 32 percent of the country’s average nominal gross domestic product over the last three years, according to the DGBAS.

Also on Thursday, Premier Su Tseng-chang (???) noted that no allocation was made in the 2022 budget proposals to increase the salaries of teachers, civil servants and military personnel.

However, Su said, he has given a directive to the DGBAS, the Directorate-General of Personnel Administration (DGPA), and other relevant government agencies to review the matter so that the central government can lead the way for such employees to obtain a pay raise.

Also commenting on the issue, DGBAS head Chu Tzer-ming (???) said that while a salary increase for those categories of employees was not recommended by the DGPA’s evaluation committee, it does not mean that a pay hike cannot be considered based on the premier’s directive.

Source: Focus Taiwan News Channel

Shares in Taiwan moved sharply higher Wednesday to close above the 17,000-point mark as investors reacted to the gains posted by markets in the United States overnight, dealers said.

The bellwether electronics sector led the upturn, with contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) drawing strong interest on reports of planned price hikes, and shipping stock gains also boosted the benchmark Taiex, they said.

The Taiex ended up 227.13 points, or 1.35 percent, at the day’s high of 17,045.86, after hitting a low of 16,821.08. Turnover totaled NT$358.67 billion (US$12.86 billion).

It was the first time the Taiex closed above the 17,000-point mark since Aug. 12, when the index ended at 17,219.94.

The market opened relatively flat, but picked up steam after TSMC began to surge on the reports it would raise prices amid an ongoing global semiconductor shortage, dealers said.

The gains posted by the electronics sector also reflected the new record high achieved by the tech-heavy Nasdaq index, which closed 0.52 percent higher overnight, dealers added.

The local electronics sector rose 1.60 percent, with the semiconductor sub-index up 2.08 percent.

“Thanks to TSMC, the market vaulted over the technical hurdles ahead of 16,984 points, the 120-moving average, and finished above the 17,000-mark, which left it technically healthier,” Hua Nan Securities analyst Kevin Su said.

TSMC rose 2.27 percent to close at the day’s high of NT$585.00 as local media reports cited anonymous sources as saying the chipmaker will raise the prices for its chips by 10-20 percent. TSMC declined to comment on the reports.

“Although TSMC did not confirm the price hike, it seemed many investors were encouraged by the news,” Su said. “If the 10-20 percent price hike is true, it will significantly boost TSMC’s bottom line.”

But Su cautioned that TSMC shares could face stiff technical resistance ahead of NT$590.00 after Wednesday’s rally.

TSMC’s buying spread to other semiconductor stocks.

United Microelectronics Crop., a smaller contract chipmaker, rose 2.74 percent to end at NT$60.00, and integrated circuit packaging and testing services provider ASE Technology Holding Co. gained 2.08 percent to close at NT$122.50.

Memory chip supplier Nanya Technology Corp. closed 1.52 percent higher at NT$67.00.

Also in the electronics sector, power management solutions provider Delta Electronics Inc. rose 3.54 percent to close at NT$277.50, while iPhone assembler Hon Hai Precision Industry Co. lost 0.46 percent to end at NT$108.50.

“Judging from the movement of these large cap stocks, I think foreign institutional investors were behind today’s buying,” Su said. According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$16.74 billion in shares on the market Wednesday.

“Shipping heavyweights continued to attract buying. Because they generated large turnover, their gains also served as a major driver of the Taiex’s gains,” Su said, suspecting foreign institutional buying as freight rates continue to rise.

The transportation sector, where many major shipping stocks are traded, rose 3.44 percent.

Evergreen Marine Corp., the largest container cargo shipper in Taiwan, rose 2.86 percent to close at NT$144.00, and rival Wan Hai Lines Ltd. soared 7.38 percent to end at NT$262.00.

Airlines stocks played catch-up, with China Airlines up 1.76 percent to close at NT$17.30, and EVA Airways up 1.61 percent to end at NT$18.95.

Elsewhere, food brand Uni-President Enterprises Corp. rose 0.14 percent to close at NT$70.60, while China Steel Corp., Taiwan’s largest steel maker, ended unchanged at NT$36.00, and Formosa Petrochemical Corp. lost 0.42 percent to close at NT$94.60.

“The U.S. Federal Reserve’s attitude toward its monetary policy remains one of the most important factors moving global markets,” Lu said, suggesting that investors follow the annual symposium for global central bankers to kick off in Jackson Hole, Wyoming, on Thursday for clues on the Fed’s thinking.

Source: Focus Taiwan News Channel

Shares in Taiwan moved sharply higher Monday on a technical rebound from last week’s slump, with large cap tech and shipping stocks leading the upturn throughout the session, dealers said.

Interest in local stocks was sparked by the gains posted on U.S. markets at the end of last week as concerns that the U.S. Federal Reserve would tighten its monetary policy were eased after a hawkish Fed official softened his tone, dealers said.

The Taiex, the Taiwan Stock Exchange’s (TWSE) benchmark weighted index, ended up 399.90 points, or 2.45 percent, at 16,741.84, after moving between 16,459.13 and 16,785.29. Turnover totaled NT$363.52 billion (US$13.01 billion).

The market opened up 0.71 percent and buying accelerated to push the Taiex above 16,700 points, after the Dow Jones Industrial Average rose 0.65 percent and the tech-heavy Nasdaq index gained 1.19 Friday in view of the Fed official’s stance.

Dallas Federal Reserve President Robert Kaplan, among the most hawkish Fed officials on monetary policy, said Friday he could adjust his view if an escalation of the Delta variant materially affected economic growth.

Last week, the Taiex tumbled 640.17 points, or 3.77 percent, amid fears that the Fed would scale down its bond purchases later this year.

“The plunge on the Taiex seen last week resulted from the minutes of the Fed’s last policymaking meeting held in July,” Cathay Futures Consulting analyst Tsai Ming-han said. “But Kaplan’s comments came at a time when the Delta variant is spreading worldwide.

“It seemed his view was more responsive to the current situation. The gains in the U.S., Taiwan, and other regional markets indicated investors at home and abroad reacted positively to his comment,” he said, referring to gains on markets in Tokyo, Hong Kong and Shanghai on Monday.

Tsai said buying in the electronics sector was led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, which rose 2.54 percent to close at NT$566.00.

TSMC’s gains led the electronics sector and the semiconductor sub-index to move higher by 2.50 percent and 3.00 percent, respectively.

Among other semiconductor stocks, United Microelectronics Corp., a smaller contract chipmaker, rose 5.21 percent to end at NT$58.60, and IC packaging and testing services provider ASE Technology Holding Co. gained 4.31 percent to close at NT$121.00.

IC designer MediaTek Inc. closed 4.35 percent higher at NT$911.00.

Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. rose 2.87 percent to close at NT$107.50 and power management solutions provider Delta Electronics Inc. closed 2.66 percent higher at NT$270.00.

“The shipping industry had taken a beating in recent sessions. Today shipping stocks made a comeback, pushing up the Taiex further,” Tsai said.

The transportation sector, in which many major shipping stocks are traded, rose 7.99 percent, helped by the Cabinet’s approval of a plan last week to extend a transaction tax discount for day trading for another three years after it expires at the end of this year.

Day traders, who buy and sell the same stock in a single day, have typically favored shipping stocks. Among them Evergreen Marine Corp. rose 8.68 percent to close at NT$144.00, and rival Wan Hai Lines Ltd. soared 10 percent, the maximum daily increase, to end at NT$248.00.

Bulk cargo shipper U-Ming Marine Transport Co. also jumped 10 percent to close at NT$70.20.

Elsewhere in the old economy sector, Formosa Plastics Corp. rose 2.30 percent to end at NT$98.00, and Nan Ya Plastics Corp. gained 2.08 percent to close at NT$83.60 after international crude oil prices snapped a seven session losing streak overnight.

In the financial sector, which rose 1.23 percent, Cathay Financial Holding Co. gained 2.61 percent to end at NT$55.10, and Fubon Financial Holding Co. added 3.27 percent to close at NT$79.00, while Mega Financial Holding Co. closed 1.27 percent lower at NT$31.05.

“Despite the significant gains in the Taiex today, turnover failed to top NT$405 billion, the daily average over the past 20 sessions, indicating many investors remained reluctant to chase prices,” Tsai said.

“Investors are still waiting for more clues about the Fed’s next move.”

According to the TWSE, foreign institutional investors bought a net NT$14.20 billion in shares on the market Monday.

Source: Focus Taiwan News Channel

Taipei, Aug. 20 (CNA) Shares in Taiwan closed lower Friday after giving up earlier gains amid lingering concerns over a possible move by the U.S. Federal Reserve to cut asset purchases later in the year, dealers said.

The bellwether electronics sector fell into negative territory with contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) facing growing downward pressure in the late trading session despite a report saying Intel Corp. is outsourcing production to the Taiwanese firm, they said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 33.46 points, or 0.20 percent, at 16,341.94 after moving between 16,248.08 and 16,507.11. Turnover totaled NT$347.82 billion (US$12.42 billion).

The market opened up 0.31 percent and soon rose to the day’s high on a technical rebound from a 2.68 percent plunge a session earlier. TSMC attracted strong buying in the wake of a Reuters report which said Intel has established a partnership with the Taiwanese chipmaker by outsourcing production, dealers said.

However, selling followed and the broader market seesawed for the rest of the session before the downward pressure on TSMC increased late on, pushing the electronics sector as well as the broader market to below their previous closing levels by the end of trading, dealers added.

“After yesterday’s sell-off, market sentiment has been hit hard,” Hua Nan Securities analyst Lu Chin-wei said. “Many investors at home and abroad have growing concerns that the Fed will start to downsize its quantitative easing this year.”

Such concerns were raised by Wednesday’s release of the minutes of the last Fed policymaking meeting in July, which hinted that the American central bank would start cutting bond purchases later in the year.

“The U.S. dollar is gaining its footing so foreign institutional investors have started to move their funds from non-greenback assets. In Taiwan, liquid stocks like TSMC have become their target,” Lu said.

After hitting the day’s high of NT$563.00 in the early morning session, TSMC came under pressure and closed down 1.25 percent at NT$552.00 despite the Intel report.

According to Reuters, Intel detailed its partnership with TSMC overnight, outsourcing production to the Taiwanese manufacturer in a bid to defend its market share against competition from Advanced Micro Devices Inc. and NVidia Inc.

Reuters said Intel will use TSMC’s advanced 5 nanometer and 7nm processes to roll out its Ponte Veechio chip and Alchemist graphics chips, while TSMC declined to comment on the report.

“Amid the current fragile sentiment, it was no surprise that TSMC’s initial technical rebound was followed by selling. A similar movement was also seen on the Taiex,” Lu said. TSMC shared dropped 2.61 percent on Thursday.

Led by TSMC, the electronics sector ended down 0.48 percent with the semiconductor sub-index down 0.74 percent.

Among other semiconductor stocks, shares in United Microelectronics Corp., a smaller contract chipmaker, rose 0.36 percent to close at NT$55.70, but came off a high of NT$56.40, while integrated circuit designer MediaTek Inc. lost 1.69 percent to end at NT$873.00.

Bucking the downturn, iPhone assembler Hon Hai Precision Industry Co., a market laggard, rose 1.46 percent to close at NT$104.50, and its metal casing subsidiary Foxconn Technology Co. gained 2.17 percent to end at NT$65.90.

“Investors also continued to cut their holdings in select old economy stocks, pushing down the Taiex further,” Lu said.

In the petrochemical sector, which lost 1.12 percent after international crude oil prices overnight dipped to the lowest level since May due to the stronger greenback, Formosa Plastics Corp. lost 0.93 percent to close at NT$95.80, Formosa Chemicals & Fibre Corp. fell 1.37 percent to end at NT$79.10, and Nan Ya Plastics Corp. shed 2.50 percent to close at NT$81.90. But, Formosa Petrochemical Corp. rose 0.22 percent to end at NT$91.30.

Some major shipping stocks outperformed the broader market with Taiwan’s largest container cargo shipper Evergreen Marine Corp. up 3.52 percent to close at NT$132.50. Rivals Yang Ming Marine Corp. and Wan Hai Lines Ltd. rose 3.16 percent and 5.87 percent, respectively, to end at NT$130.50 and NT$225.50 after the Cabinet finalized a plan Thursday to extend a transaction tax cut for day trading an additional three years after it expires at the end of this year.

Shipping stocks had been favored by local investors who were keen on day trading, a practice in which investors buy and then sell the same stock or sell and then buy the same stock in one single session.

“More losses on the Taiex are possible as foreign funds continue to exit the regional markets due to a rising U.S. dollar,” Lu said. “As foreign institutional investors keep cutting their holdings, it is hard to say where the nearest technical support will be.”

According to the TWSE, foreign institutional investors sold a net NT$14.51 billion worth of shares on the main board Friday.

Source: Focus Taiwan News Channel

Taipei, Aug. 20 (CNA) Taiwan shares closed down 33.46 points, or 0.20 percent, at 16,341.94 Friday on turnover of NT$347.82 billion (US$12.42 billion).

Source: Focus Taiwan News Channel