Taipei, June 27 (CNA) Shares in Taiwan closed lower Wednesday as earlier gains were eroded, which pushed down the main board into negative territory by the end of the session amid lingering concerns over trade friction between Washington and Beijing, dealers said.
Selling focused on large-cap stocks, in particular in the bellwether electronics sector, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), which continued to experience poor performance after its shares went ex-dividend on Monday, the dealers said.
Due to simmering U.S.-China trade friction, the Taiwan dollar kept moving lower against the U.S. dollar as foreign investors moved more of their funds out of the region into greenback-denominated assets for a safe haven, which raised concerns over depleting liquidity in the local equity market, they added.
The weighted index on the Taiwan Stock Exchange, or Taiex, ended down 41.14 points, or 0.38 percent, at the day's low of 10,701.03, off an early high of 10,800.34, on turnover of NT$145.85 billion (US$4.79 billion).
The market opened up 0.23 percent and rose to the day's high in the early morning session on a mild technical rebound from losses seen in the previous sessions as investors here were encouraged to buy by a higher Wall Street overnight, the dealers said.
But with the Taiex breaching the 10,800-point mark at one stage, selling set in to drag down tech heavyweights, in particular TSMC, to send the broader market below the 240-day moving average of 10,710 points again by the end of the session, they said.
"Uncertainty over trade ties between the U.S. and China kept dictating investor sentiment, so with the Taiex boucing back in the early morning session, some investors shifted to the sell side," Concord Securities analyst Kerry Huang said.
"Many investors remained reluctant to chase prices, and that's why the main board failed to sustain its early strength and fell to the 240-day moving average again," Huang said.
Huang said a weaker TSMC, the most heavily weighted stock in the local market, undermined the overall market sentiment as its shares weakened further after going ex-dividend (when the share price of a stock is cut by the cash dividend per share paid to shareholders) on Monday.
TSMC, which is set to pay NT$8 for each of the shares held by shareholders in July after going ex-dividend, fell 0.70 percent to close at NT$213.00 off an early high of NT$216.00, with 39.81 million shares changing hands.
Led by the TSMC, the bellwether electronics sector ended down 0.52 percent and the semiconductor sub-index closed 0.65 percent lower.
Also in the high-tech sector, iPhone assembler Hon Hai Precision Industry Co. lost 0.12 percent to end at NT$80.90 after hitting NT$81.10, and Largan Precision Co., a smartphone camera lens supplier to Apple Inc., shed 3.65 percent to close at the day's low of NT$4,360.00.
Select old economy stocks in the petrochemical sector appeared resilient throughout the session. Among them, Nan Ya Plastics Corp. rose 0.12 percent to end at NT$85.50, while Formosa Chemicals & Fibre Corp. ended unchanged at NT$118.00.
"I suspect that buying in these old economy stocks came from government-led funds, as the government wanted to bolster local equity prices at a time when foreign investors continued to cut their holdings," Huang said.
"It seems that a weaker Taiwan dollar has accelerated investors pace to sell stocks and move their funds out of the country," Huang said.
According to the TWSE, foreign institutional investors sold a net NT$12.22 billion-worth of shares on the main board Wednesday after a net sell of NT$6.17 billion the previous day.
(By Frances Huang)
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