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Taiwan shares end lower, pulled down by tech sector

04/22/2024 07:25 PM
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CNA file photo
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Taipei, April 22 (CNA) Shares in Taiwan closed lower Monday after failing to sustain early gains, hurt mainly by the bellwether electronics sector following a plunge by tech stocks in markets in the United States at the end of last week, dealers said.

The Taiex, the Taiwan Stock Exchange's benchmark weighted index, ended down 115.90 points, or 0.59 percent, at 19,411.22 after moving between 19,395.31 and 19,695.49. Turnover totaled NT$480.86 billion (US$14.73 billion).

The market opened down 0.31 percent after follow-through selling from a 3.81 percent tumble on Friday but quickly regained its footing and hit the day's high at around 9:14 a.m.

Selling re-emerged at around 10 a.m., however, as tech heavyweights, including contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), came under pressure, pushing the Taiex into negative territory.

"After the heavy losses on Friday, the Taiex became technically fragile," Cathay Futures Consultant analyst Tsai Ming-han (蔡明翰) said. "Despite the initial gains today, investors appeared reluctant to chase prices and seemed willing to trim holdings further."

April 19: Taiex registers record single-day drop

On Monday, the Taiex plunged 774.08 points, the steepest single session drop.

Tsai said the electronics sector, which lost 1.48 percent, fell victim to tech losses seen on U.S. markets Friday, when the tech-heavy Nasdaq slid 2.05 percent and the Philadelphia Semiconductor Index lost 4.12 percent.

The two indices slid because of lingering concerns over when the U.S. Federal Reserve might start cutting interest rates, given sticky inflation and better-than-expected economic data in Washington in recent months.

"Dimming hopes that a rate hike cycle will start in June has made tech stocks in the U.S. less attractive, and it was no surprise that their volatility sent the local electronics sector lower today, starting with TSMC," Tsai said.

TSMC

After a 3.46 percent fall in its American depositary receipts Friday, TSMC, the most heavily weighted stock in the local market, lost 1.07 percent to close at NT$742.00 after hitting a high of NT$757.00.

TSMC's losses contributed about 65 points alone to the Taiex's fall.

"TSMC remained fundamentally sound but cautious sentiment toward the broader market scared off many investors," Tsai said. "More losses are possible and the nearest technical support for the stock is expected at around NT$723.00, the 60-day moving average."

TSMC's selling spread to other semiconductor stocks, including smartphone IC designer MediaTek Inc., which slid 2.72 percent to end at NT$966.00.

Other tech stocks

Application-specific integrated circuit (ASIC) designer Alchip Technologies Inc. closed down 3.32 percent at NT$2,765.00, and Global Unichip Corp., TSMC's ASIC design subsidiary, fell 4.33 percent to end at NT$1,105.00.

Following a sell-off of AI-related stocks in the U.S., AI server maker Quanta Computer Inc. lost 4.76 percent to close at NT$230.00, and rival Wistron Corp. shed 5.65 percent to end at NT$108.50.

In addition, Wistron's cloud application subsidiary, Wiwynn Corp., shed 6.70 percent to end at NT$2,160.00.

Bucking the downturn, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, ended unchanged at NT$143.00.

Higher crude prices

"Tensions in the Middle East cut both ways: As crude oil prices moved higher, petrochemical stocks left geopolitical concerns behind to steam ahead," Tsai said.

In the petrochemical sector, which rose 4.04 percent, Formosa Chemicals & Fibre Corp. gained 5.15 percent to close at NT$55.10, Formosa Petrochemical Corp. added 4.91 percent to end at NT$72.70, Nan Ya Plastics Corp. grew 4.18 percent to close at NT$57.30, and Formosa Plastics Corp. ended up 3.87 percent at NT$69.70.

In the textile industry, which is also sensitive to crude oil prices and rose 2.91 percent, Tainan Spinning Co. surged 10 percent, the maximum daily increase, to close at NT$17.10, and Far Eastern New Century Corp. rose 4.10 percent to end at NT$32.40.

Electric machinery sector

On the other hand, electric machinery stocks, which had risen sharply in recent sessions on hopes they would benefit from the government's investment in the electricity grid, largely moved lower as investors pocketed recent gains, dealers said.

Among the falling electric machinery stocks, Shihlin Electric & Engineering Corp. fell 4.12 percent to close at NT$314.00, and Chung-Hsin Electric & Machinery Manufacturing Corp. shed 6.33 percent to end at NT$185.00.

Tsai said the financial sector attracted bargain hunters due to its relatively low valuations, rising 1.76 percent.

Fubon Financial Holding Co. rose 1.85 percent to close at NT$66.20, and Cathay Financial Holding Co. gained 2.00 percent to end at NT$48.40.

"Because the U.S. markets are trading below their 60-day moving averages, the Taiex still appears more expensive, so I expect the local market to test its 60-day moving average of 19,267 points soon," Tsai said.

According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$12.95 billion in shares on the market Monday.

(By Frances Huang)

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