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Taiwan shares extend losses, end below 10,300 points

2017/07/07 16:35:52

Taipei, July 7 (CNA) Shares in Taiwan extended their losses from a session earlier to tumble below the 10,300 point mark as the bellwether electronics sector fell on weakness in high-tech stocks in U.S. markets overnight, dealers said.

Selling spread to the old economy and financial sectors to further push down the broader market amid cautious sentiment ahead of the release of jobs data in Washington later in the day, they said.

The weighted index on the Taiwan Stock Exchange closed down 70.95 points, or 0.68 percent, at 10,297.25, after moving between 10,294.69 and 10,343.30, on turnover of NT$82.12 billion (US$2.68 billion).

The market opened down 0.24 percent in reaction to a 0.74 fall in the Dow Jones Industrial Average and a 1.00 percent slide in the tech-heavy Nasdaq index overnight as global bond yields moved higher, dealers said.

Selling continued to the end of the session as large cap electronics stocks such as contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) and iPhone assembler Hon Hai Precision Industry Co. (鴻海), came under pressure amid worries of more volatility in the tech sector in the U.S., they said.

"The U.S. market dictated the local equity market again today," KGI Securities analyst Phil Chu said.

"There have been lingering worries that valuations of U.S. high-tech stocks remain high and further selling will follow at a time when the U.S. Federal Reserve is in a rate hike cycle."

Chu noted that the weakness in electronics stocks dragged shares below the 20-day moving average of around 10,316.

The bellwether electronics sector closed down 0.67 percent, led by TSMC, the most heavily weighted stock in the local market, which fell 0.72 percent to end at NT$206.00 after a recent strong showing driven by aggressive foreign institutional buying, dealers said.

Also in the high-tech sector, Hon Hai, the second most capitalized stock on the market, closed down 0.87 percent at NT$114.50, and Catcher Technology Co. (可成), a metal casing supplier to Apple Inc., shed 1.60 percent to end at NT$368.00.

Bucking the downturn, smartphone brand HTC Corp. (宏達電) gained 1.53 percent to end at NT$73.10 after it reported a 52 percent month-on-month increase and a 8.38 percent year-on-year rise in consolidated sales to NT$6.89 billion for June after the launch of its latest flagship model, the HTC U11, in late May.

Still, HTC's consolidated sales for the first six months of this year were down 8.96 percent from a year earlier to NT$30.67 billion.

"Market sentiment remained hurt by the Fed's rate hike cycle. Selling was seen across the board today with non-high-tech stocks also under pressure throughout the session," Chu said.

Among the falling old economy stocks, Nan Ya Plastics Corp. (南亞) fell 0.66 percent to close at NT$75.10, Formosa Chemicals & Fibre Corp. (台化) lost 0.88 percent to end at NT$90.00, and food brand Uni-President Enterprises Corp. (統一) shed 1.31 percent to close at NT$60.30.

"Judging from the selling of large cap stocks, I think foreign institutional investors who cut their long position contracts in the futures market yesterday stood on the sell side today," Chu said.

According to the TWSE, foreign institutional investors sold a net NT$6.33 billion in shares on Friday after a net drop in their holdings in the futures market of more than 5,000 long position contracts a day earlier.

"The upcoming non-farm jobs data for June in Washington could serve as a factor that influences Wall Street, so turnover here remained moderate with many investors staying on the sidelines, waiting for the jobs report before making their next move," Chu said.

Despite Friday's losses, Chu said that since the third quarter is a traditional peak season for the electronics industry, he expected the market to find short-term support as the weighted index moves toward the nearest technical support level at around 10,250.

(By Frances Huang)