Shares in Taiwan came under pressure throughout the trading session Wednesday as selling occurred almost across the board with large-cap stocks in focus, dealers said.
Market sentiment remained cautious as many investors stayed on the sidelines, anxiously awaiting a conclusion on a rate hike from a two-day policymaking meeting of the United States Federal Reserve due later in the day, dealers added.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down by 124.78 points, or 0.86 percent, at 14,424.52 after moving between 14,384.11 and 14,525.46. Turnover totaled NT$177.445 billion (US$5.65 billion).
The market opened down by 0.22 percent and selling escalated as investors rushed to dump market heavyweights in the wake of a 1.01-percent decline on the Dow Jones Industrial Average and a 0.95-percent drop on the tech-heavy Nasdaq index ahead of the Fed’s decision, dealers said.
Stock market stablization fund
In the late trading session, some bargain hunters emerged to push the Taiex down to the 14,400-point level, an intraday high on July 13, when the National Stabilization Fund entered the market to bolster the local equity market, dealers added.
“Judging from today’s movement, I suspect these bargain hunters simply wanted to vault the Taiex back to 14,400 points, betting the stabilization fund would not allow the Taiex to trade below that level,” Hua Nan Securities Group analyst Lu Chin-wei said.
The NT$500 billion stabilization fund was set up in 2000 by the government to serve as a buffer against unexpected external factors that might disrupt the local bourse. The fund has been authorized to jump into the market to bolster investors’ confidence since July 12.
“But, turnover remained thin, indicating that many investors stayed idle for the moment before the Fed’s rate hike decision. The weakness in U.S. and regional markets also reflected such mentality,” Lu said.
Tech stocks
Lu said large-cap stocks in the electronics sector felt the impact from a spike in the benchmark U.S. 10-year treasury yield which briefly hit 3.6 percent, the highest since 2011, a reflection of fears over a hawkish Fed.
Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, fell by 1.15 percent to close at NT$471.00, and its losses pushed down the electronics sector and semiconductor sub-index by 1.10 percent and 1.05 percent, respectively.
Among other falling tech heavyweights, iPhone assembler Hon Hai Precision Industry Co., second only to TSMC in terms of market capitalization, also dropped by 1.38 percent to end at NT$107.00.
Smartphone camera lens maker Largan Precision Co., another Apple Inc. supplier, fell by 1.31 percent to close at NT$1,890.00 despite the newest iPhone 14 Pro and Pro Max being market hits.
Also in the electronics sector, United Microelectronics Corp., a smaller contract chipmaker, fell by 1.37 percent to close at NT$39.60, and power management solution provider Delta Electronics Inc. dropped by 1.48 percent to end at NT$267.00.
“The tech sector was not the only victim of U.S. volatility overnight,” Lu said. “Sell-off spread to old economy stocks, in particular in the steel sector amid falling product prices caused by global demand weakness.”
Old-economy sectors
In the steel sector, which fell by 1.29 percent, China Steel Corp., the largest steelmaker in Taiwan, dipped by 0.87 percent to close at NT$28.35, and Chung Hung Steel Corp. fell by 4.13 percent to end at NT$23.20,
Tung Ho Steel Enterprise Corp. dropped by 4.95 percent to close at NT$51.80, while Chun Yu Works & Co. rose by 1.11 percent to end at NT$22.75.
In addition, wire and cable supplier Walsin Lihwa Corp. fell by 1.18 percent to close at NT$42.00, and home appliance brand Sampo Corp. fell by 1.97 percent to end at NT$27.30.
Bucking the downturn, the transportation sector appeared resilient, up 0.20 percent, as the rising Baltic Dry Index, which monitors freight rates for bulk cargo shippers, boosted bulk cargo shipping firms with U-Ming Marine Transport Corp. rising by 4.71 percent to close at NT$41.10, and Sincere Navigation Corp. increasing by 2.39 percent to end at NT$21.40.
Container cargo shippers closed mixed, dealers said. Among them, Evergreen Marine Corp., Taiwan’s largest container cargo shipping firm, fell by 3.48 percent to close at NT$160.50, but rival Yang Ming Marine Transport Corp. edged up by 0.58 percent to end at NT$68.90.
U.S. rate decision
Lu said while the market had widely anticipated the Fed would raise rates by 75 basis points after its current meeting, “investors should pay attention to the tone of the American central bank in its comments after the meeting for more clues about what the Fed will do by the end of this year.”
According to the TWSE, foreign institutional investors shifted to the sell side, registering a net sell of NT$9.25 billion worth of shares on the main board Wednesday after a net buy of NT$3.24 billion Tuesday.
Source: Focus Taiwan News Channel