Taiwan shares end lower as TSMC comes under pressure

Shares in Taiwan closed lower Monday as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) came under heavy pressure, contributing significantly to the broader market falling by more than 140 points, according to dealers.

In addition to the losses suffered by tech sector stocks, investors have become more cautious about the market's future movement as the Omicron COVID-19 variant has been spreading quickly in the United States and Europe, the dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 143.48 points, or 0.81 percent, at 17,669.11, after moving between 17,646.39 and 17,812.81. Turnover totaled NT$260.45 billion (US$9.35 billion).

The market opened up 0.22 points to reach the day's high on follow-through buying from a session earlier, when the Taiex rose 0.15 percent, but selling soon set in and escalated from the mid-morning session as TSMC, the most heavily weighted stock in the local market, faced heavy pressure after some foreign tech analysts warned of a possible oversupply in chips in 2023, dealers said.

TSMC shares fell by 1.48 percent to close at NT$598.00, sending the bellwether electronics sector down 1.05 percent and the semiconductor sub-index down 1.36 percent. TSMC's losses contributed more than 70 points to the Taiex's losses.

The stock was affected by views expressed by foreign market analysts about concerns about an oversupply, prompting investors in Taiwan to pocket their gains from TSMC shares in recent sessions.

In the wake of heavy selling, TSMC accounted for the most turnover on the main board with about NT$13.01 billion worth of shares changing hands on Monday, according to the TWSE.

"TSMC shares have been faced with stiff technical resistance after breaching the NT$600 mark last week," Cathay Futures Consulting analyst Tsai Ming-han said. "Any negative leads like the comments about a possible oversupply simply triggered profit-taking selling."

"More important, tech stocks on the U.S. markets remained unstable at a time when the U.S. Federal Reserve is set to tighten its monetary policy. Today's selling in TSMC shares reflected fears over further volatility in the U.S.," Tsai said.

Tsai said TSMC could move to around NT$600.00 in the near term with strong technical support at around NT$596.00.

Among other semiconductor stocks, United Microelectronics Corp., a contract chipmaker, lost 0.16 percent to end at NT$62.20; Novatek Microelectronics Corp., which supplies drive ICs for flat panels, lost 0.56 percent to close at NT$528.00; and smartphone chip designer MediaTek Inc. fell by 1.86 percent to end at NT$1,055.00.

Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. fell by 0.45 percent to close at NT$103.00, while Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., bucked the downturn, rising by 1.57 percent to end at NT$2,270.00.

In addition, flat-panel maker Innolux Corp. rose by 1.55 percent to close at NT$19.60. Power management solution provider Delta Electronics Inc. fell by 1.86 percent to end at NT$264.00 after the company announced over the weekend that it had agreed to acquire UI Acquisition Holding Co., the parent company of Universal Instruments Corp., for US$88.90 million.

"As the electronics sector dominated the downturn on the main board, non-tech stocks were mainly traded in a quiet manner," Tsai said. "But, raw material suppliers, in particular in the steel industry, attracted buying due to rising product prices worldwide."

In the steel sector, which rose by 1.37 percent, China Steel Corp., the largest steelmaker in Taiwan, rose by 0.42 percent to close at NT$35.60; Tung Ho Steel Enterprise Corp. increased by 2.54 percent to end at NT$68.70; Chung Hung Steel Corp. grew by 5.64 percent to close at NT$44.05; and China Steel Structure Corp. soared by 10 percent, the exchange's maximum daily increase, to end at NT$61.40.

Evergreen Marine Corp., the largest container cargo shipper in Taiwan, decreased by 1.07 percent to close at NT$139.00, and rival Yang Ming Transport Marine Corp. fell by 1.21 percent to end at NT$122.00.

Biotech stocks appeared mixed despite the Omicron concerns, with test kit supplier Panion & BF Biotech Inc. rising by 1.30 percent to close at NT$70.30, while face-mask brand Universal Inc. fell by 1.21 percent to end at NT$44.95.

"After today's fall, the Taiex could see some technical support at around the 20-day moving average of 17,672 points," Tsai said. "In addition to an escalating spread of the Omicron virus, investors should also pay close attention to how the U.S. dollar will move to determine whether and how foreign institutional investors will move their funds out of the region."

According to the TWSE, foreign institutional investors sold a net NT$19.42 billion worth of shares on the main board Monday.

Source: Focus Taiwan News Channel