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Taiex breaches 10,000 points; CAL shares plunge on pilot strike

2019/02/11 11:44

Taipei, Feb. 11 (CNA) Taiwan shares moved higher Monday, the first trading session after the nine-day Lunar New Year holiday, to breach the 10,000 point mark, but the gains were capped amid lingering concerns over the global economic fundamentals and trade tensions between the United States and China, dealers said.

Shares of China Airlines (CAL), one of the leading international carriers in Taiwan, came under heavy pressure as investors took cues from an escalating strike by the company's pilots, who are demanding better work conditions, dealers said.

As of 10:53 a.m., the weighted index on the Taiwan Stock Exchange (Taiex) had climbed 91.53 points or 0.92 percent to 10,023.79, off an early high of 10,065.52. Turnover was NT$70.47 billion (US$2.29 billion).

Soon after the local equity market opened, the Taiex soared past 10,000 points but as profit taking set in, the main board began moving in a narrower range, dealers said.

"Today's gains largely reflected the upturn on Wall Street while the Taiwan market was closed for the Lunar New Year holiday," Hua Nan Securities analyst Kevin Su said.

He was referring to the fact that while the local equity market was closed Jan. 31 to Feb. 10, the Dow Jones Industrial Average gained 526.37 points, or 2.14 percent; the S&P 500 index rose 67.88 points, or 2.57 percent; and the tech-savvy Nasdaq index climbed 269.91 points, or 3.84 percent.

Su said the bellwether electronics sector led the gains on the local main board Monday as investors rushed to pick up heavyweights such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc.

As of 10:53 a.m., TSMC, the most heavily weighted stock on the local market, had jumped 3.17 percent to NT$228.00 with 41.90 million shares changing hands after its American depositary receipts rose 4.01 percent on the U.S. market over the past 10 days.

Largan, the most expensive stock in Taiwan, had risen 3.31 percent to NT$3,905.00 after posting consolidated sales of NT$3.35 billion in January, up 4 percent from a month earlier, compared with a 19.49 percent month-on-month decline in December.

However, the gains on the broader market were limited as some investors shifted to the sell side, Su said.

"There is not much room for the Taiex to move higher today, due to the psychological pressure after it breaches 10,000 points," he said. "In addition, the global economic growth seems to have slowed and the Washington-Beijing trade disputes are likely to continue to affect market sentiment."

Su said selling focused on select old economy stocks, in particular in the petrochemical sector due to a fall in international crude oil prices. Formosa Chemicals & Fibre Corp. had slumped 0.94 percent to NT$105.50 and Formosa Plastics Corp. had dropped 0.49 percent to NT$101.50 as of 10:53 a.m.

CAL, meanwhile, had plunged 4.27 percent to NT$10.10.

"CAL underperformed the broader market in the wake of the pilot strike and will continue to face downward pressure as long as the strike continues," Su said.

In a statement submitted to the TWSE on Sunday, CAL said that in the first three days of the strike, its sales dropped by about NT$78 million as it had to cancel some 60 flights.

According to Su, however, that was just a preliminary estimate.

"CAL is likely to face more financial losses due to the strike," but its operating costs will be lower because of falling crude oil prices, he said.

(By Chung Jung-feng and Frances Huang)Enditem/pc