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Taiwan shares fall below 9,600 points on economic concerns

2019/01/02 17:55

CNA file photo

Taipei, Jan. 2 (CNA) Shares in Taiwan came under heavy pressure, falling more than 170 points and ending the day below the 9,600 point mark Wednesday, as the weakness of manufacturing activity in China raised concerns over the global economy, dealers said.

Selling focused on large cap stocks on the main board, led by the bellwether electronics sector, while some investors rushed to park funds in select smaller cap stocks related to 5G applications, which helped the over-the-counter (OTC) market close in positive territory, they said.

The weighted index on the Taiwan Stock Exchange or the Taiex ended down 173.27 points, or 1.78 percent, at 9,554.14, after moving between 9,542.52 and 9,737.68, on turnover of NT$72.17 billion (US$2.25 billion).

The OTC market index ended up 0.28 percent at 123.89 points on trading volume of NT$22.74 billion.

The main board opened down 2.14 points on a mild technical correction from the previous session, when the Taiex closed up 0.89 percent, and continued to move in a narrow range in the early morning session, dealers said.

However, selling pressure escalated after 10 a.m. as investors saw heavy losses in other regional markets such as Hong Kong, Shanghai, Shenzhen and Seoul, and moved to cut their holdings in heavyweight stocks on the main board, a reflection of a fall in China's December Purchasing Managers' Index (PMI), they said.

Last month, China's PMI fell from 50.0 to 49.4. The December PMI was lower than an earlier market estimate of 49.9, marking the first time the index has fallen below 50 in more than two years.

"The disappointing PMI in China, the second largest economy in the world, sparked worries over global economic growth," Mega International Investment Services Corp. analyst Alex Huang said.

"The data prompted many investors to think the trade disputes between the United States and China have hurt China's economy, which could have spill-over effects on the global market," Huang said, "The losses in other regional markets reflected exactly such worries."

Huang said large cap tech stocks were highlighted by the selling, with the bellwether electronics sector closing down 2.00 percent.

Among the falling electronics heavyweights, shares in contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, shed 2.66 percent to close at NT$219.50 with 32.88 million shares changing hands. The TSMC losses pushed the Taiex down by about 60 points.

Also in the electronics sector, Largan Precision Co., a smartphone camera lens supplier to Apple Inc., shed 4.82 percent to end at NT$3,060.00, while iPhone assembler Hon Hai Precision Industry Co. appeared resilient, down only 0.99 percent to close at NT$70.10.

With investors locking in their earlier gains in the telecom sector, shares in Chunghwa Telecom Co. lost 5.31 percent to close at NT$107.00 after a 6.10 percent increase the previous session and Far EasTone Telecommunications Co. fell 5.24 percent to end at NT$72.40 after a 5.96 percent increase a session earlier.

Amid concerns over a global supply glut pushing down international crude oil prices, Formosa Petrochemical Corp. shed 5.50 percent to close at NT$103.00, and Formosa Chemicals & Fibre Corp. lost 5.05 percent to end at NT$99.70.

In the financial sector, which closed down 1.15 percent, Cathay Financial Holding Co. shed 2.34 percent to end at NT$45.90 and Fubon Financial Holding Co. lost 2.02 percent to close at NT$46.10.

Among gaining 5G related stocks on the OTC market, Browave Corp. rose 9.33 percent to close at NT$41.60, and TrueLight Corp. soared 10 percent, the maximum daily increase, to end at NT$35.95.

With large cap stocks on the main board falling, investors parked their funds in smaller stocks as a safe haven, Huang said.

"After the Taiex fell below 9,600 points, the main board is technically weaker," Huang said. "But, the main board could find short term technical support at around 9,474 points, an intraday low on Dec. 26, 2018."

Huang said investors should pay close attention to upcoming trade talks between Washington and Beijing, scheduled for Jan. 7, which could move global financial markets.

According to the TWSE, foreign institutional investors sold a net NT$9.53 billion worth of shares on the main board Wednesday.

(By Frances Huang)Enditem/AW