Taiwan shares end down as turnover dips to over 7-month low

Taipei, Sept. 3 (CNA) Shares in Taiwan closed lower Tuesday as turnover shrank to the lowest in more than seven months amid caution over the U.S. economy, ahead of the release of August manufacturing activity data, dealers said.

Large cap tech stocks largely moved lower led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) as investors appeared wary of movements on U.S. markets with futures there on the decline, pointing to a possible fall on spot markets later in the day, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange, ended down 142.89 points, or 0.64 percent, at the day's low of 22,092.21, off a high of 22,303.50.

Turnover totaled NT$289.71 billion (US$9.02 billion), the lowest since Jan. 31, when the figure stood at NT$278.06 billion.

The market opened up 5.01 points and rose to the day's high, up 68.40 points in the early morning session as the main board attempted to stage a rebound from a 0.15 percent fall on Monday, dealers said.

However, selling soon followed with tech heavyweights in focus, in particular TSMC, the most heavily weighted stock on the local market, while iPhone assembler Hon Hai Precision Industry Co. and artificial intelligence server maker Quanta Computer Inc. moved higher, lending support to the Taiex and capping the losses by the end of the session, dealers added.

TSMC lost 0.84 percent to close at NT$940.00 and its losses contributed about 65 points to the Taiex's fall, sending the electronics index and semiconductor sub-index lower by 0.63 percent and 0.87 percent, respectively.

U.S. economy

"Concerns over the U.S. economy continue to haunt consumer sentiment, in particular after investors witnessed U.S. futures heading south amid fears over volatility on the spot markets," according to Moore Securities Investment Consulting analyst Adam Lin.

"Before the release of the ISM manufacturing index for August, investors preferred to act prudently, which dragged turnover down to this low level," Lin said.

In addition, the Taiex remained under the influences of technical factors ahead of the 60-day moving average of 22,556 points and because the index has repeatedly failed to stay above the moving average, Lin said.

"Many investors simply lost patience and sold their stocks to keep cash on hand for the moment, and TSMC became their target today, driving the broader market lower," Lin said. "Fortunately, Hon Hai and Quanta Computer attracted buying to offset the impact."

Hon Hai, second to TSMC in terms of market value, rose 1.09 percent to end at NT$185.00, and Quanta Computer, the fifth largest cap stock, gained 1.87 percent to close at NT$272.00.

TSMC's selling spread to other semiconductor stocks with IC packaging and testing services provider ASE Technology Holding Co. down 0.98 percent to end at NT$151.50, United Microelectronics Corp., a smaller contract chipmaker, falling 0.54 percent to close at NT$55.10, and smartphone IC designer MediaTek Inc. down 0.41 percent to end at NT$1,220.00.

Despite the gains enjoyed by Quanta Computer and Hon Hai, which also rolls out AI servers, other AI related stocks also came under pressure. Among them, AI server maker Inventec Corp. lost 1.87 percent to close at NT$44.60, and LITE-ON Technology Corp., a maker of power management solutions for AI server use, dropped 1.87 percent to end at NT$44.60.

Non-tech stocks

Old economy and financial stocks largely moved in weakness throughout the session in line with the broad market, Lin said.

The petrochemical industry lost 1.71 percent with Formosa Plastics Corp. down 1.39 percent to close at NT$48.90, and Nan Ya Plastics Corp. falling 2.25 percent to end at NT$43.40.

Formosa Chemicals & Fibre Corp. shed 1.76 percent to close at NT$41.90, and Formosa Petrochemical Corp. appeared resilient, ending down only 0.54 percent at NT$54.80.

Elsewhere in the old economy sector, Shihlin Electric & Engineering Corp. shed 3.52 percent to close at NT$219.50, and Chung-Hsin Electric & Machinery Manufacturing Corp. lost 2.33 percent to end at NT$168.00.

Fortune Electric Co. dropped 3.22 percent to close at NT$631.00, and Allis Electric Co. ended down 2.21 percent at NT$133.00.

In the financial sector, which reversed a 0.66 percent increase Monday and lost 0.74 percent Tuesday, Cathay Financial Holding Co. fell 1.55 percent to close at NT$63.70, and E. Sun Financial Holding Co. lost 1.60 percent to end at NT$27.65.

U.S. data watch

After the manufacturing activity report, "Washington will release more economic data later in the week for investors to assess whether the U.S. economy will have a hard landing," Lin said, referring to durable goods sales and job data.

"The market widely anticipates the U.S. Federal Reserve will cut interest rates by 25 basis points this month, but if the cut is steeper than 25 basis points, pessimism toward the economy will soon set in as the central bank needs a more aggressive rate cut to save the economy."

According to the TWSE, foreign institutional investors sold a net NT$6.01 billion worth of shares on the main board Tuesday.