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Taiwan shares hit by selling in heavyweight tech stocks

2018/05/17 17:08:31

CNA file photo

Taipei, May 17 (CNA) Shares in Taiwan moved lower Thursday as selling focused on the bellwether electronics sector, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), dealers said.

Selling in tech heavyweights were offset to some extent by select old economy stocks, in particular in the petrochemical sector, which outperformed the broader market, posting gains on the back of rising international crude oil prices, the dealers said.

Investors held their breath, watching closely how Wall Street will move as the U.S. benchmark 10-year treasury yield stayed above the 3 percent level overnight, which could have an impact on the U.S. equity market and even the global financial markets, they added.

The weighted index on the Taiwan Stock Exchange (TWSE), or Taiex, closed down 63.76 points, or 0.59 percent, at the day's low of 10,833.81, off an early high of 10,938.63, on turnover of NT$132.35 billion (US$4.43 billion).

The market opened up 0.13 percent and rose to the day's high on follow-through buying from a session earlier, but with the Taiex breaching the 10,900 point mark at one point, selling emerged to send the electronics sector lower, the dealers said.

Selling escalated in the late trading session, which dragged down the weighted index, with large-cap electronics stocks such as TSMC and iPhone assembler Hon Hai Precision Industry Co. ending at their day's lowest levels, they said.

"Many investors remained wary of TSMC's movement after recent foreign institutional selling," KGI Securities analyst Phil Chu said. "As the most heavily weighted stock in the local market, TSMC's losses contributed about 40 points in the fall of the Taiex."

According to Chu, foreign institutional investors recorded a net sell of more than 11 million TSMC shares in the previous five trading sessions.

On Thursday, TSMC fell NT$4, or 1.74 percent, to close at the day's low of NT$226.50, off an early high of NT$231.50, with 26.82 million shares changing hands. Among other falling tech heavyweights, Hon Hai, second to TSMC in terms of market value, lost 0.47 percent to end at the day's low of NT$84.20, while Largan Precision Co., a smartphone camera lens supplier to Apple Inc., shed 3.21 percent to close at NT$3,920.00.

"Foreign institutional investors were possibly standing on the sell side for electronics stocks for the moment," Chu said. "I think the electronics sector needs some time to digest the downward pressure."

According to the TWSE, foreign institutional investors sold a net NT$3.14 billion-worth of equities on the main board Thursday.

"However, old economy stocks seemed to gain some support, which prevented the weighted index from falling further," Chu said, adding that the buying could have come from government-led funds in an attempt to dress up the broader market ahead of May 20, the two-year anniversary of President Tsai Ing-wen's (蔡英文) inauguration.

In the petrochemical sector, which was boosted by an increase in crude oil prices for three sessions in a row, Formosa Chemicals & Fibre Corp. rose 1.73 percent to close at NT$117.50, and Formosa Petrochemical Corp. gained 1.62 percent to end at NT$125.50.

In the mixed financial sector, Fubon Financial Holding Co. rose 0.57 percent to close at NT$52.50, while Mega Financial Holding Co. ended unchanged at NT$26.45.

"With the U.S. treasury yield still above 3 percent, market sentiment at home and abroad remained cautious," Chu said. "The local main board is likely to consolidate for some time before ending well above the 10,900-point mark."

(By Frances Huang)