Shares in Taiwan closed slightly lower Wednesday after initial gains were erased amid lingering caution toward the U.S. Federal Reserve’s hawkish outlook, dealers said.
The bellwether electronics sector gave up its earlier upturn as fears over further volatility with tech stocks on the U.S. markets prompted investors to lock in their profits, while moving their funds to the biotech sector as well as select old economy stocks towards the end of the session, they said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down by 26.70 points, or 0.18 percent, at 15,069.19 after moving between 15,053.52 and 15,183.96. Turnover totaled NT$178.28 billion (US$5.9 billion).
The market opened up by 0.11 percent and rose to the day’s high in the early morning trading session on a mild technical rebound from a session earlier, when the Taiex fell by 0.98 percent, as a 0.74-percent increase on the Philadelphia Semiconductor Index overnight led large Taiwanese semiconductor stocks to bounce back, dealers said.
But, selling soon set in to erase the gains initially enjoyed by semiconductor heavyweights to push down the main board to negative territory and close below the 20-day moving average of 15,110 points, dealers added.
Ahead of U.S. Fed chief’s speech
“Look at the low turnover. Many investors continued to stay on the sidelines and anxiously wait for a speech planned by Fed Chair Jerome Powell amid growing fears that the Fed will aggressively carry out its rate hike cycle,” Concord Securities analyst Kerry Huang said, referring to the fact that the benchmark 10-year U.S. treasury yield stayed above 3 percent as a reflection of expectations of more hawkish moves by the Fed.
Powell is scheduled to speak at the central bank’s annual Jackson Hole economic symposium on Thursday, while global financial markets have speculated the Fed will raise its key interest rates by 50 or 75 basis points in September.
“With many investors reluctant to chase prices for the moment, the electronics sector came off its low and the broader market simply followed as rising interest rates have made tech stocks less attractive by dwarfing their dividend yields,” Huang said.
Tech stocks
The electronics sector fell by 0.30 percent to close at 697.71, off a high of 704.62, with the semiconductor sub-index down by 0.37 percent, after contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, dipped by 0.20 percent to end at NT$503.00 after coming off a high of NT$508.00.
Powerchip Semiconductor Manufacturing Corp., a smaller contract chipmaker, also fell by 1.62 percent to close at NT$33.40, while United Microelectronics Corp., another smaller contract chipmaker, gained 0.25 percent to end at NT$40.90.
In addition, smartphone IC designer MediaTek Inc. fell by 1.33 percent to close at NT$667.00, but application-specific IC (ASIC) designer Alchip Technologies Ltd. rose by 1.67 percent to end at NT$793.00.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. dipped by 0.45 percent to close at NT$109.00, but metal casing subsidiary Foxconn Technology Co. edged up by 0.60 percent to end at NT$50.30.
“While the broader market remained in the doldrums, the main board still saw buying rotate to other sectors,” Huang said. “Today, the biotech sector was highlighted by this rotational buying as some investors sought to park their money there.”
Outperformers
The biotech sector rose by 2.05 percent but due to its relatively small weighting, its gains failed to boost the Taiex. Among the biotech stocks that performed strongly, drug developer Chunghwa Chemical Synthesis & Biotech Co. rose by 3.54 percent to close at NT$61.50, and its counterpart China Chemical & Pharmaceutical Co. increased by 2.41 percent to end at NT$22.45.
Meanwhile, test kit supplier Panion & BF Biotech Inc. rose by 2.41 percent to close at NT$149.00, and medical equipment supplier Maxigen Biotech Inc. increased by 2.97 percent to end at NT$45.10.
Rotational buying also focused on the steel industry, with China Steel Corp., the largest steelmaker in Taiwan, up 0.87 percent to close at NT$29.05, and Century Iron & Steel Industrial Co. up 1.85 percent to end at NT$88.20.
Elsewhere in the old economy sector, China Petrochemical Development Corp. soared by 10 percent, the maximum daily increase, to close at NT$11.10, while Evergreen Marine Corp., Taiwan’s largest container cargo shipper, fell by 3.15 percent to end at NT$92.10.
“In addition to the Fed’s attitude, investors should remain alert about Russia’s natural gas supplies to Europe,” Huang said. “If Moscow further cuts supplies, inflation will escalate worldwide and influence the Fed to act more aggressively.”
With the U.S. dollar on the rise against the Taiwan dollar, foreign institutional investors stayed on the sell side, registering a net sell of NT$10.59 billion worth of shares on the main board Wednesday after a net sell of NT$16.76 billion Tuesday.
Source: Focus Taiwan News Channel