Shares in Taiwan moved lower Thursday after surging a session earlier as investors took a break after a pullback on the U.S. markets overnight in the wake of Tuesday’s indecisive mid-term elections in the United States, dealers said.
The bellwether electronics sector led the downturn throughout the session amid lingering concerns over a hawkish U.S. Federal Reserve and its rate hike cycle to fight inflation ahead of the release of the October inflation data due later in the day, dealers added.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 135.05 points, or 0.99 percent, at 13,503.76 after moving between 13,463.85 and 13,559.40. Turnover totaled NT$190.85 billion (US$5.99 billion).
The market opened down 0.60 percent and selling continued, focusing on large tech stocks, after a 1.95-percent decline on the Dow Jones Industrial Average and a 2.48-percent drop on the tech- heavy Nasdaq index on Wednesday as the U.S. congressional elections have not yet produced clear results, dealers said.
After soaring 4.51 percent on Wednesday, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, became the biggest victim of Thursday’s sell-off, falling 2.28 percent to close at NT$407.50. The stock’s downturn led the electronics sector and the semiconductor sub-index in moving lower 1.30 percent and 1.56 percent, respectively.
“Yesterday, TSMC served as the major driver of the Taiex’s 2.18-percent rise as investors scrambled to buy the stock to push up the spot market in a bid to profit in options,” Moore Rich Securities Consulting analyst Adam Lin said. “Today, investors simply seized on the pullback on the U.S. markets as an excuse to pocket their gains from TSMC.”
Lin said it was no surprise that the U.S. markets came under pressure Wednesday as the Republican Party, which is favored by Wall Street and the business sector, had a weaker than expected performance in the midterm elections leading to predictions that it will win a narrow majority in the House. In the Senate, the Democratic Party still has hopes of keeping control.
Despite the losses suffered by TSMC, other large-cap semiconductor stocks appeared mixed with smartphone IC designer MediaTek Inc. rising 1.54 percent to end at NT$660.00, TSMC’s application-specific integrated circuit design subsidiary Global UniChip Corp. rising 1.02 percent to close at NT$597.00, and United Microelectronics Corp., a smaller contract chipmaker, edging up 0.48 percent to end at NT$41.65.
However, IC packaging and testing services provider ASE Technology Holding Co. decreased 0.35 percent to close at NT$86.50, and Powerchip Semiconductor Manufacturing Co., another contract chipmaker, dipped 0.31 percent to end at NT$32.60.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. fell 1.95 percent to close at NT$100.50, while Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., rose 0.51 percent to end at NT$1,965.00.
Selling in the tech sector spread to old-economy stocks with the petrochemical sector down 0.47 percent. In the sector, Taita Chemical Co. fell 1.22 percent to close at NT$820.20, Formosa Petrochemical Corp. fell 0.96 percent to end at NT$82.50, and Nan Ya Plastics Corp. closed down 0.14 percent at NT$70.60. Bucking the downturn, Formosa Chemicals & Fibre Corp. edged up 0.43 percent to end at NT$70.80.
In addition, cable and wire supplier Walsin Lihwa Corp. rose 0.86 percent to close at NT$41.05, while rival Hua Eng Wire and Cable Co. fell 1.06 percent to end at NT$14.00.
In the financial sector, which fell 0.91 percent, Fubon Financial Holding Co. was down 1.68 percent to close at NT$52.80, and Cathay Financial Holding Co. dropped 1.25 percent to end at NT$39.65.
“The local main board gave up part of its solid gains from the market overshooting yesterday, while investors shifted their attention to the inflation issue, watching how the U.S. will report the October consumer price index (CPI) amid lingering worries over more aggressive moves by the Fed,” Lin said.
“Even if there are more losses from the U.S. markets after the CPI data, I think the local main board will continue to benefit from ample liquidity at a time when the Taiwan dollar has showed signs of stabilizing against the greenback due to the reduced pressure on foreign institutional investors to move their funds out of the country,” Lin said.
After the U.S. dollar fell below the NT$32 mark on the Taipei forex market on Wednesday, the greenback recovered slightly but still ended below that mark Thursday.
Lin said investors should also keep a close eye on the quarterly index adjustments by global index provider MSCI Inc. on Taiwan’s weighting, which will be due Friday morning Taipei time.
The index adjustments have been watched closely by foreign institutional investors.
According to the TWSE, foreign institutional investors sold a net NT$1.69 billion worth of shares on the main board on Thursday.
Source: Focus Taiwan News Channel