Shares in Taiwan closed slightly lower but came off earlier lows Tuesday as investors took cues from the losses suffered by the United States markets overnight amid rising concerns over a global economic slowdown, dealers said.
The bellwether electronics sector led the downturn with large semiconductor stocks in focus after a Bloomberg report said Apple Inc. planned to scale back hiring, which raised concerns over global demand for tech gadgets, while select old economy stocks stayed resilient, lending support to the broader market, they said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down by 25.56 points, or 0.17 percent, at 14,694.08, after moving between 14,598.99 and 14,720.13. Turnover totaled NT$196.48 billion (US$6.59 billion).
The market opened down by 0.55 percent and soon dipped to the day’s low in the early-morning session as downward pressure affected large-cap semiconductor heavyweights, in particular the world’s largest contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), as the Apple report weighed on market sentiment, dealers said.
But, with the Taiex moving closer to the nearest technical support ahead of the 5-day moving average of 14,550 points, buying set in and rotated to old economy stocks in the transportation and petrochemical sectors, helping the broader market recover most of its earlier losses by the end of the session, dealers added.
“The electronics sector largely reflected the weakness of tech stocks on the U.S. markets, which fell to negative territory from earlier gains after the Apple report,” Mega International Investment Services Corp. analyst Alex Huang said, referring to a 0.81-percent fall on the tech-heavy Nasdaq index overnight.
“The (reported) move by Apple to slow down its hiring has prompted many investors at home and abroad to worry that global demand for tech devices is weakening as the major central banks have been gearing up to raise interest rates to fight inflation,” Huang said.
TSMC, tech stocks
The electronics sector fell by 0.69 percent with the semiconductor sub-index down by 0.80 percent after TSMC, the most heavily weighted stock in the local market, fell by 0.91 percent to close at NT$491.00.
“After TSMC raised its sales growth forecast for 2022 last week, the stock has appeared solid,” Huang said. “Despite today’s losses, its share price still moved above the 5-day moving average of around NT$485.00, demonstrating its resilience due to sound fundamentals.”
In its July 14 investor conference, TSMC said while global demand for consumer electronics items had been affected by rising inflation and a rate hike cycle around the world, it had faith that demand for chips made on its high-end processes would remain strong, and raised its sales growth forecast to 35 percent from 30 percent for 2022.
“After today’s hiccups, it is possible that TSMC shares could return to an uptrend,” Huang said.
Among other falling semiconductor stocks, memory chip supplier Nanya Technology Corp. fell by 2.21 percent to end at NT$53.00, application-specific IC designer Alchip Technologies Ltd. dropped by 2.90 percent to close at NT$636.00, and power management IC designer Silergy Corp. fell by 4.83 percent to end at NT$552.00.
Bucking the downturn, smartphone IC designer MediaTek Inc. edged up by 0.15 percent to close at NT$662.00, while IC packaging and testing service provider ASE Technology Holding Co. increased by 1.85 percent to end at NT$82.60 after announcing over the weekend that it will spend NT$300 billion to expand production in its Zhongli plant in Taoyuan.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. fell by 0.95 percent to close at NT$104.00, and Largan Precision Co., a supplier of smartphone cameras to Apple, edged down by 0.50 percent to end at NT$1,980.00.
“While the tech sector mostly encountered pressure, investors scrambled to park their money in the old economy sector,” Huang said. “Today, shipping stocks and petrochemical stocks were spotlighted.”
Shipping firms, stocks boosted by oil prices
The transportation sector rose by 3.30 percent, with container cargo shipper Wan Hai Lines Ltd. soaring by 8.26 percent to close at NT$131.00 before the stock goes ex-dividend on Wednesday.
Buying spread to rivals Evergreen Marine Corp. and Yang Ming Marine Transport Corp, which increased by 2.58 percent and 2.57 percent, respectively, to end at NT$91.60 and NT$87.80. “But I am still worried about falling freight rates on weakening demand,” Huang said.
On the back of a spike in international crude oil prices after U.S. President Joe Biden returned from a trip to Saudi Arabia over the weekend without a firm pledge from Gulf oil producers to boost production, Nan Ya Plastics Corp. rose by 1.27 percent to close at NT$63.70, and Formosa Chemicals & Fibre Corp. increased by 1.06 percent to end at NT$66.50.
Also sensitive to oil prices, textile brand Far Eastern New Century Corp. rose by 1.09 percent to close at NT$32.50, and Eclat Textile Co. rose by 1.38 percent to end at NT$442.00.
Financials
In the financial sector, Fubon Financial Holding Co. decreased by 1.68 percent to close at NT$58.60, and Cathay Financial Holding Co. ended down by 0.55 percent at NT$44.95.
“Today’s turnover remained light as many investors remain wary about how aggressive the U.S. Federal Reserve (Fed) will become in the next policymaking meeting scheduled for next week at a time of soaring inflation,” Huang said.
According to the TWSE, foreign institutional investors sold a net NT$2.37 billion worth of shares on the main board Tuesday.
Source: Focus Taiwan News Channel