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Taiwan shares end below 10,800 points after TSMC goes ex-dividend

2018/06/25 18:21:35

Taipei, June 25 (CNA) Shares in Taiwan closed down more than 100 points to fall below the 10,800-point mark Monday after contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) went ex-dividend, dealers said.

Selling in TSMC amid concerns over its third quarter sales spread to other stocks in the high-tech sector, but large-cap petrochemical stocks in the Formosa Plastics Group showed resilience, preventing the broader market from falling further, they said.

The weighted index on the Taiwan Stock Exchange, the Taiex, ended down 112.82 points, or 1.04 percent, at the day's low of 10,786.46, off an early high of 10,851.16, on turnover of NT$123.89 billion (US$4.08 billion).

The market opened down 0.60 percent, pushing the Taiex below the 60-day moving average of 10,877, as TSMC going ex-dividend (when the share price of a stock is cut by the cash dividend per share paid to shareholders) cut the Taiex by almost 70 points from the previous closing level.

TSMC encountered further downward pressure, leading other tech stocks as well as the broader market to move lower.

Selling escalated and appeared more visible late in the trading session to send the broader market below the nearest technical support of 10,800 points by the end of the session, they said.

"The main board was affected by TSMC's going ex-dividend," Taishin Securities Investment Advisory analyst Tony Huang said. "In particular, as TSMC weakened today, market sentiment was hurt, triggering selling on the broader market."

TSMC, the most heavily weighted stock in the local market, lost 0.68 percent to close at NT$218.00, with 44.96 million shares changing hands.

The reference ex-dividend opening price for TSMC on Monday was NT$219.50 after the company's NT$8.00 dividend was cut from Friday's closing price of NT$227.50.

"Investors remained worried by rising trade friction between the United States and China, which could affect global demand, and most of them simply wanted to lock in gains built in TSMC in recent sessions," Huang said.

"The poor performance of TSMC undercut investors' confidence in the broader market at a time when a weaker Taiwan dollar is expected to lead foreign investors to move their funds out of the country and drain liquidity from the market," Huang added.

A U.S. brokerage said in a research note last week that TSMC's sales for the third quarter might rise only 5-10 percent from the previous quarter, less than the 10-15 percent sequential increase the market had previously anticipated.

Huang said investors should watch whether TSMC will get some support at around NT$215.00 to stabilize the broader market.

Other tech heavyweights also faced selling throughout the session. Dynamic random access memory chip maker Nanya Technology Corp. fell 6.49 percent to close at NT$86.50, and iPhone assembler Hon Hai Precision Industry Co. fell 0.97 percent to end at NT$81.50.

Bucking the broader market, Largan Precision Co., a smartphone camera lens supplier to Apple Inc., gained 1.60 percent to close at NT$4,440.00.

The petrochemical sector outperformed the broader market due to a rebound in international crude oil prices, Huang said.

Among them, Formosa Plastics Corp. gained 0.46 percent to end at NT$110.00, and Nan Ya Plastics Corp. rose 0.47 percent to close at NT$85.00.

"After today's fall, the next technical support is expected at around the 240-day moving average of 10,700 points," Huang said.

"We have to watch closely how the trade dispute between Washington and Beijing will evolve, which will dictate whether foreign investors will continue to dump local stocks."

According to the TWSE, foreign institutional investors sold a net NT$8.88 billion in shares on the exchange Monday.

(By Frances Huang)