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Taiwan shares extend losses as U.S. rate cut hopes dampened

2019/06/26 17:47:17

Taipei, June 26 (CNA) Shares in Taiwan extended losses from a session earlier to close below the 10,700-point mark Wednesday as market hopes of a rate cut cycle by the U.S. Federal Reserve were curbed, dealers said.

Turnover shrank on the main board as many investors took to the sidelines amid uncertainty over global trade before the upcoming G20 summit, in which U.S. President Donald Trump is expected to meet with Chinese President Xi Jinping to talk about their trade dispute, the dealers said.

The bellwether electronics sector continued to lead the broader market lower throughout the trading session as investors cut their holdings in contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), they said.

The weighted index on the Taiwan Stock Exchange (TWSE), or Taiex, ended down 54.17 points, or 0.51 percent, at 10,652.55, after moving between 10,645.37 and 10,690.98, on turnover of NT$85.35 billion (US$2.74 billion). The previous day, trading volume stood at NT$101.3 billion.

The market opened down 0.42 percent in the wake of losses posted on the U.S. markets, where the Dow Jones Industrial Average closed down 0.67 percent and the tech-heavy Nasdaq index ended down 1.51 percent, when Fed Chairman Jerome Powell said the U.S. central bank is taking a wait-and-see stance, given how rapid recent economic changes have been, the dealers said.

Selling in local equities continued to keep the Taiex below the 10,700-point mark for the rest of the session as investor sentiment was dampened further by the downturn suffered by other regional markets, such as Tokyo, Hong Kong and Shanghai after Powell's remarks, they said.

"The global equity markets generally staged solid rebounds in recent sessions amid hopes that the Fed would kick off a rate cut cycle in the second half of this year," Hua Nan Securities analyst Kevin Su said. "But Powell's comments dampened such enthusiasm," he added.

"It was no surprise that the local main board followed its foreign counterparts to move lower as the tech sector continued to fall, and with many investors on the sidelines, turnover dipped below NT$100 billion to give us a quiet day," Su said.

The bellwether electronics sector closed down 0.58 percent, dominating Wednesday's session, led by TSMC, the most heavily weighted stock in the local market, which lost 1.68 percent to close at NT$234.50, with 27.52 million shares changing hands.

"After TSMC went ex-dividend Monday, the stock moved lower for the second consecutive session today, which raised concerns about how long the stock will take to recover, Su said.

Other large-cap semiconductor stocks also felt the pinch from TSMC's losses, with integrated circuit designer MediaTek Inc. down 0.32 percent to end at NT$310.50 and IC packaging and testing services provider ASE Technology Holding Co. down 1.31 percent to close at NT$60.50.

Memory chip stocks bucked the downturn as U.S.-based DRAM maker Micron Technology said it had resumed shipments of its chips to China's Huawei Technologies, which shows that the U.S. firm has found a way to skirt a ban imposed by Washington on the Chinese company, the dealers said.

Among the rising memory chips, Nanya Technology Corp., a business partner of Micron, gained 0.63 percent to close at NT$63.70 and rival Winbond Electronics Corp. added 0.67 percent to end at NT$15.05.

Weak sentiment also sent many old economy stocks lower, the dealers said.

In the old economy sector, Formosa Chemicals & Fibre Corp. lost 1.92 percent to close at NT$102.00 and food brand Uni-President Enterprises Corp. fell 0.73 percent to end at NT$81.40.

Elsewhere, the financial sector closed up 0.04 percent, with Cathay Financial Holding Co. up 0.35 percent to close at NT$42.75 and Fubon Financial Holding Co. up 1.11 percent to end at NT$45.40.

"For now, wise investors should stay alert ahead of the G20 summit, since few can be sure whether the U.S. and China will narrow their differences in trade issues," Su said.

According to the TWSE, foreign institutional investors sold a net NT$586 million-worth of shares on the main board Wednesday.

(By Frances Huang)