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Taiwan shares end down on resurging worry over global trade

2019/07/17 17:28:31

Taipei, July 17 (CNA) Shares in Taiwan closed lower Wednesday amid renewed concerns among investors about the trade frictions between the United States and China following recent downbeat comments on the issue by United States President Donald Trump, dealers said.

Selling focused on the bellwether electronics sector, which could be hardest hit by the global trade war, as investors locked in their recent gains, while old economy and financial stocks generally moved lower in line with the broader market, dealers said.

Market sentiment was also affected by dwindling hopes of an interest rate cut by the U.S. Federal Reserve after Washington reported better than expected retail sales for June, dealers said.

The weighted index on the Taiwan Stock Exchange (Taiex) ended down 57.57 points, or 0.53 percent, at 10,828.48, after moving between 10,804.34 and 10,861.11. Turnover totaled NT$112.88 billion (US$3.63 billion) during the session.

The market opened down 0.23 percent in a knee-jerk reaction to Tuesday's losses on the U.S. markets, where the Dow Jones Industrial Average closed down 0.09 percent and the tech-heavy Nasdaq index ended 0.43 percent lower after Trump commented on the trade war with China, dealers said.

In a Cabinet meeting on Tuesday, Trump said the U.S. still has a long way to reach a trade deal with China and could slap tariffs on an additional US$325 billion worth of Chinese goods it needed to do so. China was supposed to be buying American farm products, Trump said, adding that his administration was watching to see if that would happen.

"The trade disputes between Washington and Beijing remain a headache in the global financial markets," said Jerry Chen, an analyst at Yong Cheng International Securities Investment Consulting. "Trump's negative comments caused nervousness among many investors at home and abroad, prompting them to pocket their recent gains."

In addition, Chen said, the unlikelihood of a rate cut by the Fed led investors to sell throughout the session, after the U.S. reported that its June retail sales rose 0.4 percent, beating market expectations of a 0.1 percent increase.

In Taiwan, the local main board came under pressure, led by tech heavyweights such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), while non-tech stocks remained weak, dealers said.

"It was no surprise that investors here unloaded their electronics holdings soon after the equity market opened, trying to keep as much as cash on hand to avoid the possible adverse effects of the external factors," Chen said.

TSMC, the most heavily weighted stock on the local market and a supplier to Apple Inc., dropped 1.56 percent to close at NT$252.00, with 25.55 million shares changing hands. Its losses contributed to a decline of about 40 points on the Taiex and pushed down the bellwether electronics sector and the semiconductor sub-index by 0.88 percent and 1.42 percent, respectively.

Other large-cap "Apple concept stocks" also fell, with Largan Precision Co., a smartphone camera lens supplier, dropping 2.46 percent to close at NT$4,155.00, and iPhone assembler Hon Hai Precision Industry Co. finishing 0.88 percent lower at NT$79.30.

Old economy stocks also came under pressure, in particular in the petrochemical sector, which was affected by falling international crude oil prices overnight after U.S. Secretary of State Mike Pompeo said Iran was ready to talk about its missile program, a statement that Iran later denied.

In the petrochemical sector, Formosa Plastics Corp. shed 1.92 percent to close at NT$102.00, and Formosa Chemicals & Fibre Corp. dropped 0.82 percent to end at NT$97.10.

Financial stocks, meanwhile, were generally in the doldrums, with Cathay Financial Holding Co. closing down 0.60 percent at NT$41.30, and Fubon Financial Holding Co. falling 1.14 percent to end at NT$43.50.

"Investors were also cautious because they were waiting for results from TSMC, the world's largest contract chipmaker, which are expected to be released Thursday at an investor conference," Chen said. "Its third-quarter guidance could move semiconductor stocks worldwide."

According to Taiex data, foreign institutional investors sold a net NT$2.96 billion worth of shares on the main board Wednesday.

(By Frances Huang)