Taiwan shares end lower ahead of stabilization fund meeting

Shares in Taiwan moved lower Monday, as investors appeared reluctant to chase prices ahead of a National Stabilization Fund committee meeting later in the day, dealers said.

Market sentiment was also affected by rising fears over a hawkish U.S. Federal Reserve, after Washington on July 8 reported better-than-expected jobs data for June, which prompted many investors to stay on the sidelines Monday and pushed turnover below NT$200 billion, dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 124.00 points, or 0.86 percent, at 14,340.53, after moving between 14,313.94 and 14,525.03. Turnover totaled NT$172.91 billion (US$5.79 billion).

The market opened up 0.10 percent and rose to the day’s high early in the session, on follow-through buying from Friday, but selling soon began, pushing the main board into negative territory, below the 14,400 point mark, led by the bellwether electronics sector, dealers said.

“Looking at the thin turnover, I think many investors stayed on the sidelines ahead of the stabilization fund’s committee meeting,” Cathay Futures Consultant analyst Tsai Ming-han said. “If the fund committee decides to enter the market, market confidence will rise.”

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 committee has scheduled a regular meeting Monday afternoon to decide whether to intervene in the market, which has been hard hit by worry over skyrocketing inflation and hawkish U.S. Federal Reserve policies to tackle inflationary pressure.

Since the beginning of the year, the Taiex has tumbled 3,878.31 points, or 21.29 percent.

“Investors continue to pay close attention to the Fed’s monetary policy moves,” Tsai said. “After the stronger than expected U.S. non-farm payroll data, it is widely anticipated that the Fed will raise rates another 75 basis points at its policymaking meeting (July 26-27).”

The United States on Friday reported that it had added 372,000 new jobs in June, beating the market estimate of 250,000, which led to investors on the U.S. markets to lock in their gains, sending the Dow Jones Industrial Average down 0.15 percent, even though the tech-heavy Nasdaq index inched up 0.12 percent.

“The lackluster U.S. markets made investors here cautious and reluctant to trade,” Tsai said. “It was no surprise that semiconductor heavyweights were in the doldrums.”

Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, fell 1.07 percent to close a NT$462.00. Led by TSMC, the electronics sector lost 0.98 percent, with the semiconductor sub-index falling 1.19 percent.

“Investors are also waiting for TSMC’s market outlook, which is expected at its investor conference on Thursday, amid growing worry about an inventory buildup in the global semiconductor industry due to weaker demand,” Tsai said.

Among other semiconductor heavyweights, application-specific IC (ASIC) designer Alchip Technologies Ltd. shed 4.40 percent Monday to end at NT$609.00, United Microelectronics Corp., a smaller contract chipmaker, dropped 2.77 percent to close at NT$38.60, and smartphone IC designer MediaTek Inc. fell 2.15 percent to end at NT$637.00.

Bucking the downturn, dynamic access memory chip supplier Winbond Electronics Corp. rose 0.74 percent to close at NT$20.40.

Also in the tech sector, iPhone assembler Hon Hai Precision Industry Co. fell 0.98 percent to end at NT$101.00, while PC brand Asustek Computer Inc. gained 1.48 percent to close at NT$309.50.

Tsai said buying rotated to select old economy stocks, but their gains failed to offset the losses suffered by large tech stocks.

In the transportation sector, which rose 0.50 percent, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, lost 0.43 percent to close at NT$92.30, while rival Yang Ming Marine Transport Corp. rose 1.97 percent to end at NT$88.20.

Elsewhere in the old economy sector, Wei Chuan Foods Corp. gained 0.98 percent to close at NT$20.55, and Uni-President Enterprises Corp. rose 0.73 percent to end at NT$69.30. Taiwan Cement Corp. finished 0.84 percent higher at NT$41.10, and Asia Cement Corp. ended up 0.46 percent at NT$44.05.

The financial sector, meanwhile, fell 1.26 percent, with Fubon Financial Holding Co. dropping 1.19 percent to end at NT$58.20, but Cathay Financial Holding Co. gained 0.56 percent to close at NT$45.50.

“The U.S. will report its June consumer price index data Wednesday, which is expected to move the global markets,” Tsai said. “I expect the Taiex to fluctuate between the 5-day moving average of 14,291 points and the 10-day moving average of 14,674 in the near term.”

According to the TWSE, foreign institutional investors sold a net NT$3.39 billion worth of shares on the main board Monday.

Source: Focus Taiwan News Channel