Shares in Taiwan moved lower Tuesday amid lingering concerns that fund outflows will be triggered by expectations of sustained interest rate hikes by the United States Federal Reserve, dealers said.
Turnover remained at the relatively low level seen in recent sessions, which kept large cap tech stocks in the doldrums, they said.
The Taiex, the Taiwan Stock Exchange’s benchmark weighted index, ended down 93.08 points, or 0.56 percent, at 16,512.88, after moving between 16,465.87 and 16,593.75.
Turnover was NT$187.22 billion (US$6.37 billion), down from NT$216.77 billion on Monday and only the third time in 2022 it fell below NT$200 billion. The two other times came on May 3 and 4.
The market opened down 12.21 points and selling escalated as investors were not impressed by the 0.4 percent gains in the tech-heavy Nasdaq index and 0.05 percent rise in the Dow Jones Industrial Average overnight, dealers said.
While selling was seen across the board, the bellwether electronics sector led the downturn, pushing the Taiex below the 16,500-point mark before some bargain hunters stepped in, they said.
U.S. rate decision in mid-June
“Fears of a hawkish Fed continued to take a toll on local shares, especially after the 10-year U.S. Treasury yield exceeded 3 percent overnight,” MasterLink Securities analyst Tom Tang said.
“Many investors remained reluctant to buy the dips as they were afraid U.S. markets will face more volatility.”
Tang said Tuesday’s low turnover reflected investor worries over a potentially more aggressive rate hike cycle by the Fed following stronger than expected job data for the U.S. for May reported last week.
“With falling liquidity, it was not easy for tech heavyweights to climb out of their current weakness,” Tang said, referring to stocks such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC).
The most heavily weighted stock in the Taiex, TSMC lost 0.93 percent to close at NT$535.00, off a low of NT$532.00. TSMC’s losses led the electronics sector and the semiconductor sub-index to move lower by 0.78 percent and 0.93 percent, respectively.
TSMC
TSMC has scheduled an annual general meeting for Wednesday, which will be closely watched by investors looking for information from the company’s management on the business climate and TSMC’s expansion plans.
Among other semiconductor stocks, United Microelectronics Corp., a smaller contract chipmaker, fell 0.58 percent to end at NT$51.70, and smartphone IC designer MediaTek Inc. shed 1.66 percent to close at NT$890.00.
Bucking the downturn, Asmedia Technology Inc., a high speed surface IC designer, rose 1.81 percent to end at NT$1,405.00.
Apple developers conference
Though Apple Inc. unveiled new MacBooks, the iOS 16 operating system and more at its Worldwide Developers Conference (WWDC) overnight, local stocks in the Apple supply chain still came under pressure, dealers said.
iPhone assembler Hon Hai Precision Industry Co. lost 1.73 percent to close at NT$113.50, and Largan Precision Co., a supplier of smartphone camera lenses to Apple, shed 2.21 percent to end at NT$1,770.00.
“With inflationary pressures on the rise worldwide, demand for consumer electronics gadgets has weakened,” Tang said. “The latest WWDC seemed to fail to spark buying in these Apple concept stocks today.”
Old economy sectors
Elsewhere, many old economy stocks, in particular large cap issues, also moved lower.
Textile brand Far Eastern New Century Corp. closed 0.32 percent lower at NT$30.70, and Eclat Textile Co. fell 0.78 percent to end at NT$507.60.
Formosa Plastics Corp. shed 1.38 percent to close at NT$107.00, and food brand Uni-President Enterprises Corp. lost 0.61 percent to end at NT$64.80.
“Right now, tourism stocks seem interesting on hopes the government will ease border controls soon. Today, buying rotated to select tourism stocks,” Tang said.
Among them, The Ambassador Hotel Ltd. added 0.16 percent to close at NT$31.80, Formosa International Hotels Corp. rose 0.85 percent to end at NT$179.00, and FarGlory Hotel Co. gained 1.25 percent to close at NT$36.50.
But Lion Travel Service Co. lost 0.96 percent to end at NT$103.50.
Financials
In the financial sector, which lost 0.54 percent, Cathay Financial Holding Co. closed unchanged at NT$54.80, while Fubon Financial Holding Co. lost 0.94 percent to end at NT$63.40.
“Before the Fed holds the next policymaking meeting next week (June 14-15), the local market is expected to continue to consolidate, with many foreign institutional investors likely to either take to the sidelines or stand on the sell side,” Tang said.
According to the TWSE, foreign institutional investors sold a net NT$15.92 billion in shares on the market Tuesday.
Source: Focus Taiwan News Channel