Shares in Taiwan closed slightly lower Wednesday after recouping most of their earlier losses sparked by hawkish remarks from U.S. Federal Reserve Chair Jerome Powel at a congressional hearing.
The Taiex, the Taiwan Stock Exchange’s (TWSE) weighted index, ended down 39.69 points, or 0.25 percent, at 15,818.20 after moving between 15,740.98 and 15,821.49. Turnover totaled NT$245.36 billion (US$7.97 billion).
The market opened down 0.24 percent and dropped by 116 points to hit the day’s low during the mid-morning session.
Selling was sparked by a 1.72 percent plunge on the Dow Jones Industrial Average in the wake of congressional testimony from Powell, who told lawmakers that the Fed was likely to increase the speed and length of its current rate hike cycle on the back of better-than-expected economic data.
However, investors appeared to shrug off fears of an overly aggressive Fed, with buying emerging in the late trading session to bring the Taiex off its earlier low
According to Moore Securities Investment Consulting analyst Adam Lin, the rally was a product of options holders seeking to push up the spot market on the day that weekly contracts are settled.
Lin said that while many foreign institutional investors have turned cautious about further rate hikes by the Fed, local investors, both retail and institutional, remained willing to pick up bargains on the local main board.
According to the TWSE, foreign institutional investors sold a net NT$16.47 billion worth of shares on the main board Wednesday.
“To me, many local investors appeared bullish for the moment despite the continued Fed rate hike cycle so that the Taiex outperformed,” Lin said.
The market consensus seems to be that the Fed will raise its key interest rates by 50 basis points, instead of a previously expected 25 basis point increase, in the next policymaking meeting set for March 21-22.
On the back of bargain hunting, the bellwether electronics index fell 0.30 percent to close at 742.94, off a low of 739.03.
The semiconductor subindex declined 0.46 to end at 355.88, recovering from a low of 353.73, after contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the market’s most heavily weighted stock, lost 0.51 percent to close at NT$521.00, off a low of NT$518.00.
United Microelectronics Corp. (UMC), a smaller contract chipmaker, rose 0.97 percent to end at NT$52.10, while UMC’s display drive IC design subsidiary Novatek Microelectronics Corp. lost 0.23 percent to close at NT$429.50.
IC packaging and testing services provider ASE Technology Holding Co. lost 0.90 percent to end at NT$109.50.
Application-specific integrated circuit (ASIC) designer Alchip Technologies Inc. gained 4.49 percent to close at NT$1,000.00, but smartphone IC designer MediaTek Inc. fell 2.54 percent to end at NT$768.00.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. fell 0.95 percent to close at NT$104.00, while Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., rose 0.61 percent to end at NT$2,455.00.
“Due to strong buying from local investors, certain stocks in the areas, including energy storage and military-related device suppliers, continued to move higher today,” Lin said.
In the machinery electric sector, where many firms have engaged in energy storage development, Allis Electric Co. gained 2.66 percent to close at NT$42.40, and Chung-Hsin Electric & Machinery Manufacturing Corp. rose 2.03 percent to end at NT$100.50.
Among the military-related device suppliers, meanwhile, unmanned aerial vehicle brand Thunder Tiger Corp. soared 4.19 percent to close at NT$62.10, and aero and industrial engine developer Aerospace Industrial Development Corp. also surged 4.06 percent to end at NT$41.00.
It was a mixed bag for old-economy stocks, with Taiwan Cement Corp. losing 0.53 percent to close at NT$37.75, while Universal Cement Corp. rose 0.20 percent to end at NT$24.45.
In addition, Wei Chuan Foods Corp. fell 0.24 percent to close at NT$21.10, and rival Uni-President Enterprises Corp. ended down 0.51 percent at NT$68.90.
“Powell will continue to speak Wednesday but I do not expect he will provide more information than what he said overnight,” Lin said.
“So, investors should shift their attention to the upcoming U.S. job data due Friday for a clearer picture about the American economy,” he said.
Source: Focus Taiwan News Channel