Shares in Taiwan closed slightly lower on Wednesday as government-led funds were believed to have intervened to lend support to the local main board amid ongoing global volatility, dealers said.
Despite the government support, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) still fell below NT$400 (US$12.54) for the first time in more than two years as the local tech sector remained affected by an aggressive rate hike cycle by the United States Federal Reserve and the newly imposed ban on certain IC exports to China by the U.S., dealers added.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down by 24.79 points, or 0.19 percent, at 13,081.24 after moving between 12,991.59 and 13,130.73. Turnover totaled NT$181.56 billion.
The market opened down by 0.22 percent and selling increased to push the Taiex below the 13,000-level to the day’s low in the early morning session, falling by more than 110 points at one point, as large-cap semiconductor stocks, including TSMC, came under pressure in the wake of a 1.10-percent fall on the tech-heavy Nasdaq index and a 2.50-percent plunge on the Philadelphia Semiconductor Index overnight caused by a spike in U.S. Treasury yields indicating more rate hikes by the Fed, dealers said.
However, buying then set in, shoring up select tech stocks, including TSMC, as well as financial stocks, helping the broader market recover most of its earlier losses by the end of the session, they said.
Further tightened short selling rules
“With the Financial Supervisory Commission (FSC) having announced further tightening of short selling rules yesterday, it was no surprise that the government instructed the funds under its control today to intervene in a bid to further bolster investor confidence after the U.S. market losses,” Moore Securities Investment Consulting analyst Adam Lin said.
“Judging from the market movement, I think the government did not want to see the Taiex falling below the 13,000-point mark. It is the bottom line for now,” Lin said.
On Tuesday, when the Taiex tumbled by almost 600 points to its lowest in more than two years, the FSC announced the maximum volume of intraday security lending allowed for the short selling of a stock would be cut to 10 percent of the stock’s average daily trading volume over the previous 30 trading sessions, from the current 20 percent on Wednesday, after being lowered from 30 percent on Oct. 1.
Also from Wednesday, the FSC said,the deposit for securities borrowing by an investor would be raised from 100 percent of a stock’s value to 120 percent, after being increased from 90 percent on Oct. 1.
“However, the bellwether electronics sector continued to come under pressure amid concerns over a hawkish Fed and the ban on IC sales to China from American suppliers, although select tech heavyweights came off their day’s lows by the end of the session due to the government’s support,” Lin said. “TSMC’s movement, in particular, drew most of the market attention today.”
Tech stocks
TSMC, the most heavily weighted stock in the local market, fell by 1.00 percent to close at NT$397.50, off a low of NT$395.50. It was the first time the stock has closed below NT$400 since July 24, 2020, when the closing price stood at NT$386.00.
“TSMC will hold an investor conference tomorrow. For now, investors preferred to keep alert, waiting for the company’s guidance for the fourth quarter as the global semiconductor industry has come under inventory adjustments on weakening demand,” Lin said.
The electronics sector closed up by 0.29 percent at 589.48 after coming off a low of 584.60, with the semiconductor sub-index falling by 0.82 percent.
Among other semiconductor stocks, TSMC’s application-specific integrated circuit design subsidiary Global Unichip Corp. plunged by 10 percent, the maximum daily decline, to end at NT$493.50; IC packaging and testing services provider ASE Technology Co. fell by 1.88 percent to close at NT$73.20, and smartphone IC designer MediaTek Inc. ended down by 0.72 percent to end at NT$549.00.
Bucking the upturn, United Microelectronics Corp. (UMC), a smaller contract chipmaker, rose by 3.67 percent to close at NT$36.70 as investors shifted buying from TSMC, and UMC’s display IC design subsidiary Novatek Microelectronics Corp. also appeared resilient, rising by 0.21 percent to end at NT$237.00.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. fell by 0.96 percent to close at NT$103.00, while Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., increased by 2.84 percent to end at NT$272.00.
Outside tech sector
“I suspect government-led funds also picked up some financial stocks as the financial sector has been one of these funds’ favorites,” Lin said.
In the financial sector, which rose by 0.52 percent, SinoPac Financial Holding Co. rose by 1.48 percent to close at NT$17.10, CTBC Financial Holding Co. increased by 0.75 percent to end at NT$20.25, and Mega Financial Holding Co. rose by 0.67 percent to close at NT$30.25, while Cathay Financial Holding Co. ended down by 0.13 percent at NT$39.55.
Among the mixed old economy stocks, food conglomerate Uni-President Enterprises Corp. rose by 1.67 percent to close at NT$66.90, and meat supplier Charoen Pokphand Enterprise (Taiwan) Co. increased by 2.70 percent to end at NT$80.00, while Formosa Plastics Corp. dropped by 4.38 percent to close at NT$80.80, and Nan Ya Plastics Corp. fell by 1.51 percent to end at NT$65.10.
“In addition to TSMC’s investor conference, many investors will also be closely looking at the U.S. September consumer price index (CPI) due Thursday for more clues about what the Fed will do next to fight inflation,” Lin said.
According to the TWSE, foreign institutional investors sold a net NT$16.64 billion worth of shares on the main board Wednesday.
Source: Focus Taiwan News Channel