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Taiwan shares end down led by shipping stocks

06/11/2024 05:03 PM
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CNA file photo
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Taipei, June 11 (CNA) Shipping stocks led shares in Taiwan to close down 0.30 percent Tuesday, the first trading session after the Dragon Boat Festival long weekend, dealers said.

Despite the effects of a plunge in freight rates to Europe from China, select tech heavyweights appeared resilient, providing some support to the broader market, dealers added.

The Taiex, the Taiwan Stock Exchange's (TWSE) weighted index, ended down 66.26 points at the day's low of 21,792.12 after hitting a high of 22,003.71. Turnover totaled NT$501.53 billion (US$15.49 billion).

The market opened up 0.58 percent and soon topped the 22,000-point mark as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) steamed ahead in the wake of a 2.29 percent increase in its American depositary receipts on the U.S. market overnight, dealers said.

But, selling soon followed with the transportation industry, where the major container cargo shippers are traded, in focus as fright rates from China to Europe plunged more than 5 percent, dealers added.

TSMC and iPhone assembler Hon Hai Precision Industry Co., the top two stocks in terms of market value, continued to trade above their previous closing levels, which prevented the Taiex from falling further by the end of the session, dealers said.

Concord Securities analyst Kerry Huang said the tumble in freight rates largely came after the United Nations Security Council on Monday backed a proposal from U.S. President Joe Biden for a ceasefire between Israel and Hamas.

"So, large container cargo shipping stocks took a beating throughout the session," Huang said. "With turnover at high due to their heavy weighting, the big losses dealt a blow to the broader market."

In the transportation industry, which plunged 6.13 percent, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, shed 9.40 percent to close at NT$197.50 and rival Yang Ming Marine Transport Corp. dove 10 percent, the maximum daily decline, to end at NT$74.70. In addition, Wan Hai Lines Ltd. tumbled 8.32 percent to close at NT$88.20.

Selling also spread to bulk cargo shippers with Chinese Maritime Transport Ltd. falling 4.95 percent to end at NT$48.00.

"The silver lining was that TSMC and Hon Hai stayed afloat amid continued optimism toward artificial intelligence (AI) development throughout the session," Huang said. "Otherwise, the Taiex would have fallen further today."

TSMC rose 0.46 percent to close at NT$883.00 after hitting a high of NT$895.00 as local media reported earlier Tuesday that international tech giants scrambled to book the chipmaker's capacity in its advanced 3 nanometer process in the current booming AI era. The 3nm process is the latest technology TSMC has started mass production.

For its part, Hon Hai, which has forecast its AI server sales will grow more than 40 percent from a year earlier in 2024, gained 1.69 percent to end at NT$180.50.

Led by TSMC and Hon Hai, the electronics index rose 0.01 percent, although many other tech stocks came under pressure as investors locked in their recent gains built in recent sessions when Computex 2024 was held in Taipei.

Among the falling tech stocks, application-specific integrated circuit (ASIC) designer Alchip Technologies, Ltd. plunged 8.39 percent to close at NT$2,675.00, and Lagan Precision Co., a supplier of smartphone camera lenses to Apple Inc., shed 6.34 percent to close at NT$2,215.00.

Bucking the downturn, IC packaging and testing services provider ASE Technology Holding Co. gained 0.31 percent to close at NT$160.00, while smartphone IC designer MediaTek Inc. fell 0.39 percent to close at NT$1,270.00.

In the old economy sector, the construction industry lost 2.03 percent. "Investors have feared that the local central bank will come up with additional select credit controls to rein in home prices," Huang said, referring to a quarterly policymaking meeting scheduled by the central bank for Thursday.

Cathay Real Estate Development Co. lost 6.79 percent to close at NT$34.70., King's Town Construction Co. shed 6.20 percent to end at NT$57.50, and Crowell Development Corp. closed down 4.79 percent at NT$48.75, while Highwealth Construction Corp. gained 1.03 percent to end at NT$48.95.

Elsewhere in the old economy sector, Formosa Plastics Corp. lost 1.91 percent to close at NT$61.50, while Nan Ya Plastics Corp. ended unchanged at NT$50.80. In addition, textile brand Far Eastern New Century Corp. rose 1.01 percent to close at NT$34.90, but Eclat Textile Co. shed 2.18 percent to end at NT$539.00.

In the financial sector, which rose 0.07 percent, Fubon Financial Holding Co. rose 1.71 percent to close at NT$77.30, and Cathay Financial Holding Co. added 0.86 percent to end at NT$58.70 in the wake of their improving profitability in the first five months of this year.

"Judging from today's movement, I think the Taiex has been faced with stiff technical resistance ahead of 22,000 points," Huang said. "Before the U.S. Federal Reserve wraps up a two-day policymaking meeting Thursday morning (Taipei time), it is possible that the Taiex will move in a narrow range."

According to the TWSE, foreign institutional investors sold a net NT$33.29 billion worth of shares on the main board Tuesday.

(By Jiang Ming-yan and Frances Huang)

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