Taiwan shares end lower ahead of Fed meeting results

06/16/2021 05:21 PM
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CNA file photo
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Taipei, June 16 (CNA) Shares in Taiwan closed lower Wednesday as investors turned cautious ahead of the results of a U.S. Federal Reserve policymaking meeting due later in the day, dealers said.

The settlement date for June futures contracts on Wednesday also led to volatility on the spot market throughout the session, dealers added.

While the bellwether electronics sector came under greater pressure as investors locked in profits built a session earlier, buying continued to rotate to select old economy stocks in the petrochemical and shipping industry, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 63.43 points, or 0.37 percent, at 17,307.86, after moving between 17,275.02 and 17,398.22. Turnover totaled NT$567.57 billion (US$20.54 billion).

The market opened down 0.08 percent and moved in a narrow range during most of the session before selling escalated with semiconductor stocks in focus in the wake of a 0.90 percent fall on the Philadelphia Semiconductor Index overnight, dealers said.

However, as the Taiex fell to the day's low, bargain hunters emerged to pick up non-tech stocks, helping the broader market recover part of its earlier losses by the end of the session with the transportation and petrochemical sectors up 0.81 percent and 0.50 percent, respectively, but the electronics sector down 0.61 percent, dealers added.

After Tuesday's rally of 0.92 percent, the main board fell into consolidation mode Wednesday as investors waited for the outcome of the Fed meeting, Hua Nan Securities analyst Kevin Su said.

"Although few in the market expect the Fed to announce tighter liquidity at the meeting, many still expect the American central bank to address possible inflationary pressure, which could dictate its monetary policy in the future," Su said, referring to a 5 percent spike in the U.S. May consumer price index.

"Before the Fed speaks, many investors at home and abroad preferred to cut their holdings to avoid more losses down the road," Su said. "In Taiwan, the electronics sector became the target of the selling but the downturn was not intolerable."

Su said semiconductors led the entire tech sector to move lower with contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, down 0.66 percent to close at NT$605.00 after a 1.27 percent drop in its American depositary receipts on the U.S. market overnight.

"As long as TSMC can maintain the price well above the NT$600 mark, the stock will remain technically healthier and optimism toward its business prospects is expected to provide support to its shares," Su said.

Among other semiconductor stocks, United Microelectronics Corp., a smaller contract chipmaker, lost 2.42 percent to end at NT$52.40, and smartphone IC circuit designer MediaTek Inc. fell 0.40 percent to close at NT$985.00. In addition, application specific IC designer Alchip Technologies, Ltd. dropped 4.84 percent to end at NT$550.00 after a 10 percent surge on Tuesday.

Bucking the downturn, shares in PC brand Acer Inc. rose 2.59 percent to close at NT$31.70, and rival Asustek Computer Inc. gained 1.17 percent to end at NT$388.00 on strong demand in a booming stay-at-home economy.

Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. fell 1.33 percent to close at NT$111.50, while Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., rose 1.66 percent to end at NT$3,070.00.

"The silver lining was that rotation buying remained active in the current market awash in liquidity. So some old economy stocks attracted interest in a cyclical recovery," Su said.

Su said large shipping stocks were highlighted Wednesday on continued optimism over an uptrend in freight rates at a time of tight cargo service supply worldwide. The transportation sector accounted for more than 50 percent of the Taiex's total turnover due to strong interest.

Among them, shares in Wan Hai Lines Ltd. soared 7.31 percent to close at NT$205.50, and Yang Ming Marine Transport Corp. rose 1.96 percent to end at NT$130.00. But, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, fell 1.84 percent to close at NT$133.50.

Su said petrochemical stocks were boosted by an increase in international crude oil prices to an almost three year high overnight.

In the sector, Formosa Petrochemical Corp. rose 2.76 percent to close at NT$111.60, Taita Chemical Co. gained 1.67 percent to end at NT$42.70, and Formosa Chemicals & Fibre Corp. added 1.06 percent to close at NT$86.10.

"In addition to the Fed meeting, investors had better keep a close eye on crude prices. If crude prices continue to climb, worries over inflationary pressures will go deeper," Su said.

According to the TWSE, foreign institutional investors sold a net NT$18.18 billion worth of shares on the main board Wednesday. Dealers said the futures settlement was likely behind foreign institutional selling.

(By Pan Chih-yi and Frances Huang)

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