Shares in Taiwan finished lower by more than 160 points Monday, as the stock market failed to maintain earlier gains resulting from a technical rebound on the U.S. markets at the end of last week, dealers said.
Old economy stocks, especially in the shipping industry, came under heavy pressure which pushed down the broader market to negative territory, while select large tech stocks either posted gains or recouped part of their earlier losses to give support to the main board at the end of the session, they said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 162.54 points, or 0.98 percent, at 16,408.35, after moving between 16,380.06 and 16,680.29. Turnover totaled NT$299.54 billion (US$10.75 billion).
The market opened up 0.18 percent and hit the day’s high after rising over 100 points in the early morning session as buying was sparked by a rally on the U.S. markets Friday, where the Dow Jones Industrial Average bounced back by 1.43 percent from the doldrums in the previous sessions, dealers said.
But with the Taiex moving closer to the nearest technical resistance ahead of 16,700 points, selling set in with a focus on shipping heavyweights as investors took cues from losses incurred by other regional markets, including the Hong Kong market, where the trading of shares of China’s debt-ridden property developer Evergrande was suspended, they said.
“Amid volatility in the regional markets, market sentiment here got hit as margin calls on shipping stocks after their recent tumbles prompted many retail investors to scramble to dump these stocks,” Concord Securities analyst Kerry Huang said.
A margin call occurs as the value of an investor’s margin account falls below the broker’s required amount, which requires the investor to either deposit more money in the account or sell some of the assets held in the account.
“Despite the 160-point drop in the Taiex, turnover remained thin today, indicating more selling in these shipping stocks might come, which could pave the way for further losses down the road,” Huang said.
The heavy losses suffered by large cap shipping stocks pushed down the transportation sector by 7.37 percent, causing the broader market to trend lower.
Among the container cargo shipping stocks which were faced with margin calls, Evergreen Marine Corp., Yang Ming Marine Transport Co. and Wan Hai Lines Ltd. plunged 10 percent, the maximum daily decline, to close at NT$102.50, NT$97.20, and NT$165.50, respectively.
Bucking the downturn, bulk cargo shippers Sincere Transport Co. rose 1.67 percent to end at NT$36.50, and U-Ming Marine Transport Co. rose 4.77 percent to close at NT$65.90.
Elsewhere in the old economy sector, Nan Ya Plastics Corp. fell 1.13 percent to close at NT$87.30, and China Steel Corp., the largest steelmaker in Taiwan, shed 2.37 percent to end at NT$35.00, while Formosa Plastics Corp. rose 0.96 percent to close at NT$111.00, and textile brand Far Eastern New Century Corp. increased 0.69 percent to end at NT$29.35.
“While the bellwether electronics sector as a whole finished below the previous closing level, select large cap stocks, especially in the semiconductor industry, appeared resilient compared with the broader market,” Huang said.
Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, fell 0.35 percent to close at NT$572.00 after hitting a low of NT$569.00. Led by TSMC, the electronics sector declined 0.80 percent to end at 772.52, up slightly from a low of 770.76.
“I suspect some government-led funds stood on the buy side for TSMC in a bid to keep the broader market from falling further by taking advantage of the stock’s huge weighting,” Huang said.
Among other resilient semiconductor stocks, integrated circuit designer MediaTek Inc. rose 0.79 percent to close at NT$892.00, and dynamic random access memory chip supplier Nanya Technology Corp. increased 0.93 percent to end at NT$64.90.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. closed unchanged at NT$103.00, and Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., also ended unchanged at NT$2,135.00.
On expectations that the NT$5,000 spending vouchers to be issued by the government from Friday will boost consumption, hotel operators Chateau International Development Co. gained 8.66 percent to close at NT$35.15, and Formosa International Hotels Corp. rose 3.83 percent to end at NT$149.00.
In addition, Lion Travel Service Co. increased 5.03 percent to close at NT$87.70, and Phoenix Tours International Inc. rose 3.39 percent to end at NT$42.70.
“We have to watch closely whether the Taiex will maintain its strength above the next technical support at 16,248 points, the intraday low on Aug. 20. Otherwise, further losses could come to push down the main board to test 16,000 points,” Huang said.
According to the TWSE, foreign institutional investors sold a net NT$3.11 billion worth of shares on the main board Monday.
Source: Focus Taiwan News Channel