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Taiwan shares end slightly lower as TSMC retreats

2019/10/18 17:23:16

Taipei, Oct. 18 (CNA) Shares in Taiwan closed slightly lower Friday as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) retreated slightly after a recent rally, dealers said.

Buying rotated to other tech and old economy stocks, lending some support to the market, but investors were still worried about global trade as the United States and China have yet to formalize an initial deal they supposedly reached last week, they said.

The weighted index on the Taiwan Stock Exchange (TWSE), the Taiex, ended down 6.66 points, or 0.06 percent, at 11,180.22, after moving between 11,154.86 and 11,237.38. Turnover was NT$144.94 billion (US$4.74 billion).

The market opened up 3.33 points as investors were encouraged by overnight gains of 0.40 percent by the tech-heavy Nasdaq index and 0.28 percent by S&P 500 index, which both benefited from strong corporate earnings, dealers said.

But as the Taiex moved closer to stiff technical resistance at around 11,270, the highest intraday level since Jan. 23, 2018, selling set in.

Many investors sold TSMC shares, a day after the chipmaker reported earnings for the third quarter and made sales projections for the fourth quarter at an investor conference that were in line with market expectations, dealers said.

TSMC, the most heavily weighted stock in the local market, fell 0.17 percent to close at NT$293.00 after hitting a high of NT$295.50, with 45.05 million shares changing hands.

"The stock had made a strong showing in recent sessions, driving an upturn in the overall market amid optimism toward its earnings for the third quarter and outlook for the fourth quarter," Hua Nan Securities analyst Kevin Su said.

"Now that the numbers have come out, investors decided to pocket the gains."

At the investor conference, TSMC said its consolidated sales for the fourth quarter should range between US$10.2 billion and US$10.3 billion.

That would be 9 percent higher than in the third quarter, when its net profit hit a record NT$101.07 billion, up 51.4 percent from the previous quarter.

TSMC also announced that it has raised its capital expenditure for 2019 to US$14 billion to US$15 billion, up US$4 billion from an earlier plan to push the development of high-end processes including the 7 nanometer and 5nm technologies.

The capex was the highest in the company's history.

"While TSMC took a pause, its higher capex boosted some semiconductor equipment suppliers today," Su said.

Among them, Foxsemicon Integrated Technology Inc. rose 7.14 percent to close at NT$142.50, and Xintec Inc. gained 3.50 percent to end at NT$48.75.

Su said some other tech stocks benefited from rotational buying to offset TSMC's decline. Power management solutions provider Delta Electronics Inc. finished 1.87 percent higher at NT$136.50, and iPhone assembler Pegatron Corp. rose 1.22 percent to end at NT$58.00.

Rotational buying also lifted certain old economy stocks, Su said. Among them, Taiwan Cement Corp. rose 2.12 percent to close at NT$40.95, and food brand Great Wall Enterprise Co. added 1.34 percent to end at NT$37.85.

In addition, Taisun Enterprise Co., another food product supplier, soared 5.57 percent to close at NT$21.80 on the back of its sizable property assets, Su said.

In the financial sector, which ended down 0.21 percent, CTBC Financial Holding Co. fell 1.18 percent to close at NT$20.90 and Fubon Financial Holding Co. lost 0.11 percent to end at NT$45.25, while Cathay Financial Holding Co. closed unchanged at NT$41.30.

"It was no surprise that the market suffered a pullback today ahead of 11,270 points, where there were high technical hurdles, but the selling was not intolerable because of the strong liquidity in the market, Su said.

After Friday's market consolidation, liquidity-driven buying is expected to return to help the Taiex take off again, Su predicted.

"But caution over the Washington-Beijing trade dispute remains. And as long as the two sides have not signed any agreement in black and white, uncertainty is expected to continue to affect market sentiment," Su said.

Despite the fall in the index, foreign institutional investors were still buyers, registering a net buy of NT$6.12 billion in shares Friday.

(By Frances Huang)
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