Shares in Taiwan moved lower on Monday as many investors remained wary of a rate hike cycle by the United States Federal Reserve, and stayed on the sidelines, pushing down turnover to the lowest level this year, dealers said.
The bellwether electronics sector reversed its earlier mild gains to post losses, led by large-cap semiconductor stocks, while a sell-off in the transportation sector with container cargo shipping firms in focus added to the downward movement of the broader market, dealers added.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down by 136.08 points, or 0.93 percent, at 14,425.68, after moving between 14,424.33 and 14,585.06. Turnover totaled NT$159.45 billion (US$5.08 billion).
The market opened up by 5.51 points and rose to the day’s high by only 23 points in the early morning session on a mild technical rebound from the previous session, where the Taiex fell by 0.74 percent.
However, selling soon set in to push down the main board to negative territory, which continued into the end of the session as investors took cues from the losses on the U.S. markets, dealers said.
U.S. rate decision
They noted that the Dow Jones Industrial Average decreased by 0.45 percent and the tech-heavy Nasdaq index fell by 0.90 percent on Friday amid lingering fears of an aggressive Fed ahead of a two-day policymaking meeting due to wrap up Wednesday (U.S. time).
“Before the Fed’s decision, it was no surprise that market sentiment remained cautious, prompting many investors to take to the sidelines, which caused the plunge in today’s turnover,” MasterLink Securities analyst Tom Tang said.
Monday’s turnover of NT$159.45 billion became the lowest for this year, finishing below NT$172.04 billion on Aug. 25, which was the previous low for this year.
“As the market has widely anticipated the Fed will raise [its rate by] an additional 75 basis points this week, a wide interest rate gap between the United States and Taiwan markets continues to cause foreign institutional investors to move their funds out of the local market,” Tang said.
Since March, the Fed has raised its key interest rates by 225 basis points to flight skyrocketing inflation, while the local central bank has hiked rates by only 37.5 basis points.
Tech heavyweights
“Today, liquid tech heavyweights, again, fell victim to a stronger U.S. dollar caused by fund outflows, and contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) kept dictating the Taiex,” Tang said.
After coming off a high of NT$473.00, TSMC, the most heavily weighted stock in the local market, fell by 1.06 percent to close at NT$467.00, with only 17.09 million shares changing hands, down from 39.03 million shares on Friday.
“A sharp fall in TSMC’s trading volume on Monday provided additional evidence that many investors appeared reluctant to chase prices even as the stock posted initial gains before the Fed’s meeting,” Tang said.
Led by TSMC, the electronics sector fell by 0.75 percent with the semiconductor sub-index down by 0.96 percent.
Among other semiconductor stocks, dynamic random access memory chip supplier Nanya Technology Corp. fell by 1.02 percent to end at NT$48.60, and power management IC designer Silergy Corp. declined by 1.57 percent to close at NT$87.60.
Bucking the downturn, IC packaging and testing services provider ASE Technology Holding Co. rose by 0.84 percent to end at NT$84.30, and smartphone IC designer MediaTek Inc. edged up by 0.67 percent to close at NT$604.00.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. gave up its earlier gains, dipping by 0.47 percent to end at NT$107.00, while PC brand Acer Inc. edged up by 0.46 percent to close at NT$21.80, and gaming PC vendor Micro-Star International Co. rose by 1.65 percent to end at NT$123.00.
Shipping firms
“Selling also spread to old economy stocks, in particular in the shipping industry as investors feared that falling demand for cargo shipping services would hurt shipping firms’ earnings amid a weakening global economy,” Tang said. “The industry is in a cyclical slowdown.”
In the transportation sector, which fell by 5.71 percent, Evergreen Marine Corp., the largest container cargo shipping firm in Taiwan, tumbled by 9.63 percent as its trading was resumed after a trading suspension since Sept. 7 in preparation for a capital reduction.
Rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. dropped by 7.48 percent and 8.18 percent, respectively, to end at NT$68.00 and NT$74.10.
Outperformers
Tang said some investors parked their money in select stocks in the cement and financial sectors due to their relatively low valuations as hedging.
Taiwan Cement Corp. rose by 0.52 percent to close at NT$38.80, and Chia Hsin Cement Corp. edged up by 0.28 percent to end at NT$17.85, while Fubon Financial Holding Co. increased by 0.53 percent to close at NT$56.80, and CTBC Financial Holding Co. edged up by 0.23 percent to end at NT$22.15.
“As more foreign institutional investors exit the local stock market, eyeing U.S. dollar-denominated assets for higher returns, I expect that turnover will stay low and quiet trading will continue ahead of the Fed’s meeting,” Tang said.
According to the TWSE, foreign institutional investors sold a net NT$7.19 billion worth of shares on the main board Monday.
Source: Focus Taiwan News Channel