Taiwan shares give away early gains, tech stocks under pressure

Shares in Taiwan gave up their initial gains to fall 0.45 percent Monday as investors pocketed profits in the bellwether electronics stocks, dealers said.

Select old economy stocks, in particular in the petrochemical and textile sectors were bolstered by higher international crude oil prices, but overall market sentiment was hurt by an uptick in the benchmark U.S. 10-year Treasury yield, they said.

The Taiex, the Taiwan Stock Exchange’s (TWSE) benchmark index, ended down 75.73 points, or 0.45 percent, at 16,705.46, after moving between 16,695.89 and 16,862.03. Turnover totaled NT$269.38 billion (US$9.61 billion).

The market opened up 0.20 percent and soon rose to the day’s high as investors were encouraged by a 1.1 percent rise in the Dow Jones Industrial Average on Friday that was driven by better than expected third quarter corporate earnings reports and retail sales data.

But after the Taiex rose above the 16,800-point mark, large cap tech stocks, especially contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), came under pressure, sending the broader market into negative territory, dealers said.

“After a strong showing on Friday, TSMC encountered selling as investors rushed to pocket their profits, so it was no surprise that the tech sector and the Taiex simply followed suit today,” Hua Nan Securities analyst Kevin Su said.

TSMC, the most heavily weighted stock in the local market, fell 1.67 percent to close at NT$590.00, after a 4.71 percent surge on Friday in the wake of positive leads from the company’s investor conference held a day earlier.

“It seemed the stock faced stiff technical resistance at around NT$600.00. Since it failed to remain above that level and moved lower, TSMC is now in consolidation mode,” Su said.

“The pressure faced by tech stocks came from worries over U.S. 10-year treasury yields trending higher, as higher yields will make tech stocks look less attractive,” Su said.

Dragged down by TSMC, the electronics index lost 0.96 percent to end at 788.78, and the semiconductor sub-index fell 1.31 percent.

TSMC’s selling spread to other semiconductor stocks. United Microelectronics Corp. closed 1.18 percent lower at NT$58.40, and integrated circuit packaging and testing services provider ASE Technology Holding Co. fell 1.66 percent to end at NT$94.60.

Bucking the downturn, smartphone chip designer MediaTek rose 1.17 percent to close at NT$867.00.

Shares of iPhone assembler Hon Hai Precision Industry Co. lost 1.83 percent to end at NT$107.50, even though the company unveiled three electric vehicle models in Taipei on Monday as it intensifies efforts to enter the EV market.

“The EV leads have been factored into Hon Hai shares. But other smaller stocks in the EV supply chain benefited from the introduction of the three new models,” Su said.

Among them, light-emitting diode supplier Taiwan Semiconductor Co. surged 7.45 percent to close at NT$70.70, battery producer Simplo Technology Co. rose 2.71 percent to end at NT$284.50, and metal-oxide-semiconductor field-effect transistor (MOSFET) maker Panjit International Inc. gained 1.31 percent to close at NT$92.60.

Old economy stocks appeared mixed throughout the session, dealers said.

An increase in crude oil prices sent petrochemical and textile raw material stocks higher, Su said.

Among the rising petrochemical stocks, Formosa Petrochemical Corp. rose 1.94 percent to close at NT$105.00 and Formosa Plastics Corp. gained 0.44 percent to end at NT$115.00.

In the textile sector, which rose 2.18 percent, Tainan Spinning Co. rose 8.75 percent to close at NT$23.00, and Shinkong Synthetic Fibers Corp. gained 2.13 percent to end at NT$19.15.

Elsewhere in the old economy sector, Evergreen Marine Corp., the largest container shipper in Taiwan, fell 1.60 percent to close at NT$92.40, and rival Yang Ming Marine Transport Co. lost 3.58 percent to end at NT$89.00.

The financial sector was boosted by the stronger than expected earnings reported by Goldman Sachs on Friday. The sector rose 0.60 percent, with Cathay Financial Holding Co. closing 0.69 percent higher at NT$58.70, and Mega Financial Holding Co. gaining 1.38 percent to end at NT$32.95.

“The ongoing earnings season in Taiwan and in the U.S. is expected to continue to dictate the direction of the Taiex. So investors should keep a close eye on it,” Su said.

Despite the fall in the Taiex, foreign institutional investors bought a net NT$3.28 billion in shares Monday.

Source: Focus Taiwan News Channel