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Taiwan shares extend losses on tech weakness

2018/07/17 17:11:18

Taipei, July 17 (CNA) Shares in Taiwan closed lower for the second straight day as tech stocks followed the lead of their counterparts on Wall Street overnight amid caution over the ongoing earnings season at home and in the United States, dealers said.

The financial sector fended off the downward pressure, however, on hopes of higher investment returns overseas as interest rates in major markets, in particular in the U.S., have been on the rise, they said.

The weighted index on the Taiwan Stock Exchange (TWSE), the Taiex, closed down 38.46 points, or 0.36 percent, at 10,778.99, after moving between 10,758.83 and 10,818.84, on turnover of NT$133.72 billion (US$4.38 billion).

The market opened down 0.14 percent on follow-through selling from Monday, when the Taiex ended 0.43 percent lower, and remained in negative territory during most of the session.

The bellwether electronics sector led the downturn after a 0.26 percent fall on the tech-heavy Nasdaq index overnight.

"The market fell below its technical support at the 60-day moving average of 10,833 points and even below the 10,800-point mark today amid investor caution toward the current earnings season in Taiwan and the U.S.," Mega International Investment Services Corp. analyst Alex Huang said.

"The local market is expected to continue to move in consolidation mode before an investor conference planned by TSMC (Taiwan Semiconductor Manufacturing Co.) for Thursday," Huang said.

While the negative effects on stock prices arising from trade friction between Washington and Beijing have been reduced for the time being, Huang said, many investors wanted to wait for contract chipmaker TSMC's guidance for the third quarter before buying again.

Following a 0.22 percent decline by Apple Inc. on Monday, TSMC, a provider of processors for the latest iPhones, lost 0.89 percent to close at NT$221.50, with 21.53 million shares changing hands.

"TSMC has generally moved in a narrow range in recent sessions. After Thursday's conference, it could break the range for better or worse depending on its guidance," Huang said.

Led by TSMC, the most heavily weighted stock in the local market, the bellwether electronics sector ended down 0.46 percent and the semiconductor sub-index closed 0.50 percent lower.

Among other "Apple concept stocks," smartphone camera lens supplier Largan Precision Co. lost 0.89 percent to end at NT$4,995.00, and metal casing maker Catcher Technology Co. dropped 1.10 percent to close at NT$366.00.

Hon Hai Precision Industry Co., which churns out iPhones and is second to TSMC in terms of market value, rose 0.12 percent to end at NT$82.90.

Also in the high-tech sector, flat panel maker AU Optronics Corp. closed unchanged at NT$12.00, while rival Innolux Corp. rose 1.36 percent to end at NT$11.20.

Selling also spread to old economy stocks with Formosa Plastics Corp. down 1.38 percent to close at NT$107.00 and Formosa Chemicals & Fibre Corp. down 1.75 percent to end at NT$112.50 on a decline in international crude oil prices overnight.

"Thanks to the gains posted by financial stocks, the Taiex did not come under heavier pressure," Huang said. "Investors are hoping insurance firms will benefit from higher interest rates overseas to reap higher returns."

In the financial sector, which gained 0.16 percent, Cathay Financial Holding Co. rose 0.38 percent to close at NT$52.20, and Mega Financial Holding Co. rose 0.56 percent to end at NT$26.95.

According to the TWSE, despite the market's losses, foreign institutional investors bought a net NT$1.27 billion in shares on the exchange Tuesday.

(By Frances Huang)
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