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Taiwan shares end down after Fed meeting

2019/09/19 17:31

Taipei, Sept. 19 (CNA) Shares in Taiwan moved lower to close below 10,900 points Thursday as investors were disappointed with the latest policymaking meeting of the U.S. Federal Reserve, which failed overnight to imply more interest rate cuts down the road, dealers said.

Selling was seen across the board, while select large-cap suppliers to Apple Inc. appeared resilient, lending support to the broader market on high expectations that the new iPhones will generate higher-than-expected shipments after its strong showing in pre-order sales over the weekend, the dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE), or Taiex, ended down 34.75 points, or 0.32 percent, at 10,894.70, after moving between 10,874.66 and 10,954.18, on turnover of NT$112.66 billion (US$3.63 billion).

The market opened up 0.17 percent and soon rose to the day's high on follow-through buying from a session earlier, when the Taiex closed up 0.51 percent, but with the index moving closer to the 11,000-point mark, where stiff technical resistance was in place, selling emerged to push down the main board into negative territory and even below 10,900 points by the end of the session, the dealers said.

After concluding its two-day monetary policymaking meeting Wednesday, the Fed cut its key interest rates by 0.25 percentage points, the second rate reduction for this year, as the market had widely anticipated.

In a news conference after the meeting, Fed Chair Jerome Powell said that the U.S. central bank will engage in a "sequence" of rate cuts if necessary, but added that he did not see the need right now.

"Judging from the comments from Powell, I think the Fed appeared kind of hawkish toward its monetary policy for the moment, and that disappointed investors at home and abroad," Hua Nan Securities analyst Kevin Su said.

"It was not surprising that the local main board fell from its earlier gains today, and other major markets in the region largely moved in a narrow range throughout the session after Powell's news conference," Su said.

Su said the silver lining for the local equity market is that some Apple concept stocks remained resilient, which prevented the Taiex from falling further after TF International Securities analyst Ming-Chi Kuo (郭明錤) raised his forecast for new iPhone shipments for 2019 to 70 million-75 million units from 65 million-70 million after the new iPhone 11 series made a strong debut over the weekend.

Among the Apple suppliers, Taiwan Semiconductor Manufacturing Co. (TSMC), which is believed to serve as the sole supplier of processors for the new iPhones, closed unchanged at NT$265.00, while the stock came off an earlier high of NT$268.00, with 25.20 million shares changing hands.

TSMC went ex-dividend Thursday as the chipmaker was set to issue NT$2 in cash dividend per share for its earnings of NT$2.57 per share in the first quarter of this year.

Largan Precision Co., a supplier of smartphone camera lenses to Apple, continued an uptrend, rising 2.14 percent to end at NT$4,300.00 after hitting a high of NT$4,335.00, while ASE Technology Holding Co., an integrated circuit packaging and testing services provider to Apple, also added 0.27 percent to close at NT$73.20.

In addition, iPhone assembler Hon Hai Precision Industry Co. extended its losses from a session earlier, dropping 1.21 percent to close at NT$73.50, off an early high of NT$74.80, after Terry Gou (郭台銘), founder of the company, announced late Monday that he will not run for Taiwan's presidency in January but will continue to participate in political affairs.

Selling was also seen in old economy and financial stocks after the Fed meeting, Su said.

Among the falling old economy stocks, food brand Uni-President Enterprises Corp. lost 0.52 percent to close at NT$76.60 after hitting a high of NT$77.30, and Formosa Petrochemical Corp. lost 1.77 percent to end at the day's low of NT$99.70.

In the financial sector, which closed down 0.15 percent, Fubon Financial Holding Co. lost 0.88 percent to close at NT$45.20 and Mega Financial Holding Co. fell 0.34 percent to end at NT$29.45, while Cathay Financial Holding Co. gained 0.24 percent to close at NT$41.85.

"Despite today's selling with investors pocketing their earlier gains, the losses were not intolerable at all, as the local equity market remained awash in liquidity," Su said. "I expect that the Taiex will continue to fluctuate in a limited range in the near term, with strong technical support expected at around 10,700 points."

According to the TWSE, foreign institutional investors bought a net NT$302.14 million-worth of shares on the main board Thursday, marking the 11th consecutive session of net buying.

(By Frances Huang)Enditem/J