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Taiwan shares end moderately down amid large-cap weakness

2018/07/16 17:14:11

Taipei, July 16 (CNA) Shares in Taiwan closed moderately lower Monday as investors shifted to the sell side to lock in earlier gains, pushing down the local main board into negative territory at the end of the session, dealers said.

Selling focused on market heavyweights across the board as investor sentiment remained haunted by growing trade friction between the United States and China, while the ongoing earnings season at home and on Wall Street also prevented investors from chasing prices for the moment, the dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE), or Taiex, closed down 47.09 points, or 0.43 percent, at the day's low of 10,817.45, off an early high of 10,890.20, on turnover of NT$123.71 billion (US$4.05 billion).

The market opened up 3.43 points and soon rose to the day's high in the early morning session in reflection of gains on Wall Street, where the Dow Jones Industrial Average closed up 0.38 percent on Friday, the dealers said.

With the Taiex moving closer to 10,900 points, investors started to unload their holdings, in particular in large-cap stocks in both the electronics and non-high-tech sectors, to pocket their earlier gains, which dragged down the main board to close below the 60-day moving average of around 10,830 points, they said.

"Trade tension between Washington and Beijing remained a big concern to the equity market, despite significant gains seen in the previous session," Hua Nan Securities analyst Kevin Su said. On Friday, the Taiex closed up 1.17 percent after a 0.58 percent increase the day before.

"The upturn in the previous two sessions was only technical in nature, so the main board fell into consolidation mode again today," Su said.

Su said that after the Taiex breached the 120-day moving average of 10,872 points and even moved closer to 10,900 at one point in the early session, investors feared a major technical pullback, sending the main board lower to even end below the 60-day moving average.

"We have to continue to watch closely how trade disputes between the U.S. and China will evolve, especially the possibility that the two sides will be willing to negotiate," Su said.

Last week, the administration of U.S. President Donald Trump released a list of US$200 billion-worth of Chinese goods that could be hit with 10 percent tariffs, part of a U.S. strategy to retaliate for what it sees as China's longtime unfair trade practices. The duties could take effect after public hearings are held at the end of August.

That would follow 25 percent tariffs imposed by the U.S. on US$34 billion-worth of Chinese imports July 6 and Beijing's immediate retaliation with duties on the same value of U.S. goods.

Among the falling stocks on the main board, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, closed down 0.45 percent at the day's low of NT$223.50 after hitting a high of NT$225.00.

Also in the bellwether electronics sector, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, lost 0.12 percent to end at NT$82.80 off a high of NT$83.40, and integrated circuit designer MediaTek Inc. dropped 0.88 percent to close at NT$282.50 off a high of TN$286.50.

In the non-high-tech sector, Taiwan Cement Corp. shed 2.30 percent to end at NT$42.50 and Formosa Plastics Corp. lost 1.36 percent to close at NT$108.50, while Mega Financial Holding Co. fell 0.74 percent to end at NT$26.80.

"The current earnings season in Taiwan and in the U.S. could move share prices here, and before the results from some major electronics firms, many investors are holding their breath," Su said, referring to TSMC, which has scheduled an investor conference for July 19.

According to the TWSE, foreign institutional investors sold a net NT$3.81 billion-worth of shares on the main board Monday.

(By Frances Huang)