Taiwan shares come under pressure, led by tech stocks

04/21/2021 05:05 PM
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CNA file photo
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Taipei, April 21 (CNA) Shares in Taiwan moved lower on Wednesday, falling by more than 100 points as the bellwether electronics sector took a hit from losses incurred by tech stocks listed on the U.S. markets overnight, dealers said.

With the current market awash in liquidity, however, buying rotated to old economy stocks in the shipping and cement industries as investors tended to park their money in safe havens outside the tech sector, lending some support to the broader market, the dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 121.76 points, or 0.7 percent, at 17,202.11, after moving between 17,167.39 and 17,282.76. Turnover totaled NT$439.83 billion (US$15.71 billion).

The market opened down 0.24 percent and fell to the day's low in the mid-morning session as investors were motivated to cut their holdings by the downturn among tech stocks on the U.S. markets, where the tech-heavy Nasdaq index fell 0.92 percent and the Philadelphia Semiconductor Index tumbled 1.52 percent Tuesday.

With the Taiex dipping below the 17,200-point mark at one point, some bargain hunters emerged to help the main board recoup some of its earlier losses, but downward pressure then escalated, in particular in the afternoon session, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), until the end of the session, the dealers said.

"Selling in TSMC and other tech heavyweights in the semiconductor industry simply reflected the weakness in the U.S. markets overnight," Concord Securities analyst Kerry Huang said.

"As foreign institutional investors stood on the sell side in the wake of the U.S. losses, these tech stocks became the targets of the selling as investors pocketed their recent gains," Huang said. "I think the selling had nothing to do with the fundamentals of TSMC and other semiconductor firms, and the losses were just technical in nature."

TSMC, the most heavily weighted stock in the local market, lost 1.66 percent to close at the day's low of NT$592.00, with 38.34 million shares changing hands.

The stock dipped below the NT$600 mark soon after the local equity market opened and the pressure continued into the end of the trading session.

According to the TWSE, foreign institutional investors sold a net NT$20.26 billion-worth of shares on the main board on Wednesday.

Led by TSMC, the electronics sector and the semiconductor sub-index ended down 1.13 percent and 1.52 percent, respectively, leading the losses on the broader market.

TSMC's selling was also seen among other semiconductor heavyweights.

Among them, integrated circuit packaging and test services provider ASE Technology Holding Co. lost 2.65 percent to close at NT$110.00, memory chip supplier Nanya Technology Corp. fell 1.40 percent to end at NT$98.30, United Microelectronics Corp., a smaller contract chipmaker, lost 1.29 percent to close at NT$53.40 and IC designer MediaTek Inc. ended down 1.00 percent at NT$988.00.

Bucking the downturn, flat panel maker AU Optronics Corp. soared 8.18 percent to close at NT$29.10 and rival Innolux Corp. surged 8.04 percent to end at NT$27.55 percent as buying was triggered by a hike in screen prices.

"Despite selling by foreign institutional investors, many local investors sitting on large funds still appeared willing to buy," Huang said. "Today's buying focused on shipping and cement stocks, which offset the impact resulting from the tech weakness," he added.

Boosted by rising freight rates on solid demand, the shipping sector jumped 8.18 percent. Evergreen Marine Corp., the largest shipping firm in Taiwan, soared 10 percent, the maximum daily increase, to close at NT$75.90, while Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. also rose 10 percent to end at NT$62.70 and NT$89.60, respectively. In the booming cement industry, which rose 5.29 percent on the back of strong demand from increasing infrastructure projects worldwide, Taiwan Cement Corp. grew 7.12 percent to close at NT$55.70 and Asia Cement Corp. added 2.96 percent to end at NT$52.20.

"After today's downturn, more losses could follow, but the Taiex is expected to see strong technical support at around 17,000 points, which is closer to the 10-day moving average," Huang said.

He said that investors should pay close attention to the ongoing earnings season at home and in the United States.

(By Frances Huang)

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