Taiwan shares end lower; Hon Hai down after going ex-dividend

Taipei, July 2 (CNA) Shares in Taiwan moved lower by almost 180 points on Tuesday as investors rushed to lock in their gains largely accumulated by the bellwether electronics sector.

Out of the major tech stocks, iPhone assembler Hon Hai Precision Industry Co. led the downturn as the stock failed to return to its prior ex-dividend level.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 179.20 points, or 0.78 percent, at 22,879.37 after moving between 22,833.78 and 23,041.90. Turnover totaled NT$480.89 billion (US$14.77 billion).

The market opened down 0.20 percent and soon entered a period of volatility around the 23,000-point mark before selling increased in the late morning. Large-cap tech stocks, including Hon Hai and contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), were in focus after their strong rally.

The weakness on the main board continued until the end of the session, pushing the Taiex below 23,000 points amid fears of more volatility down the road.

"Despite the gains posted by tech stocks on the U.S. markets overnight, investors in Taiwan cut their holdings and pocketed gains to avoid further losses," MasterLinks Securities analyst Tom Tang said.

On Monday, the tech-heavy Nasdaq index in the United States rose 0.83 percent, led by Apple and Tesla.

"The Taiex tried to sustain its strength above 23,000 points in the past few sessions but given the technical hurdles, it was no surprise to see this consolidation," Tang said.

In the first six months of this year, the Taiex soared 5,101.44 points, or about 28.4 percent, amid a frenzy over artificial intelligence development.

"Today, large-cap tech stocks led the downtrend," Tang said. "Particularly Hon Hai as the stock went ex-dividend with many investors speculating whether it would return to pre-ex-dividend levels.

Hon Hai, also known as Foxconn, reversed its earlier gains and fell 2.85 percent to close at NT$204.50. It gave NT$5.4 in cash dividend per share at the end of this month.

In Taiwan, going ex-dividend refers to the date a stock starts trading without the value of its next dividend payment.

"In addition to Hon Hai, TSMC also moved lower, serving as another driver to the Taiex fall," Tang said. "Like Hon Hai, TSMC experienced profit taking after recent solid gains also on the back of AI."

TSMC and Hon Hai are the two largest stocks in the local market in terms of market value.

In the first six months of this year, TSMC, believed to provide chips made on its advanced processes to U.S.-based AI chip designer Nvidia Corp., soared by 62.9 percent.

Hon Hai, which has forecast AI server sales will grow more than 40 percent this year, surged about 105 percent during the same period.

Tang said selling also spread to other tech heavyweights with United Microelectronics Corp., a smaller contract chipmaker, down 2.23 percent to close at NT$52.70, and IC packaging and testing services provider ASE Technology Holding Co. down 3.34 percent to end at NT$159.00.

"For hedging purposes, local institutional investors, in particular securities investment trust firms, have recently put their funds into defensive telecom stocks. Moreover, they have also put funds into the financial sector."

In the telecom segment, Taiwan Mobile Co. rose 2.29 percent to close at NT$111.50, and Far EasTone Telecommunications Co. gained 4.28 percent to end at NT$90.10. Chunghwa Telecom Co. fell 0.77 percent to close at NT$125.50.

The financial sector rose 0.21 percent with Shin Kong Financial Holding Co. up 1.41 percent to end at NT$10.10, and SinoPac Financial Holding Co. up 1.36 percent to close at NT$26.10. In addition, Fubon Financial Holding Co. ended up 0.75 percent at NT$81.00.

Old economy stocks largely moved in line with the broader market, Tang said.

In the petrochemical industry, which lost 1.21 percent, Formosa Plastics Corp. shed 2.27 percent to close at NT$55.90, and Formosa Chemicals & Fibre Corp. fell 2.41 percent to end at NT48.55.

Bucking the downturn, shipping stocks benefited from rising freight rates with buying rotating to bulk cargo shippers. Among them, Sincere Navigation Corp. rose 5.14 percent to close at NT$31.70, and U-Ming Marine Transport Corp. gained 5.31 percent to end at NT$59.50.

"The next move the U.S. Federal Reserve will make is expected to move the global financial markets," Tang said. "So, a speech scheduled by Fed Chair (Jereme) Powell for Tuesday should be listened to for more clues on when the American central bank will cut rates."

Tang said more Taiex profit-taking is possible, but that the index is expected to see technical support around the 20-day moving average of 22,600 points.

According to the TWSE, foreign institutional investors sold a net NT$24.79 billion of shares on the main board on Tuesday.