Taiwan shares end down as tech sector suffers profit taking

Taipei, Oct. 28 (CNA) Shares in Taiwan saw initial gains eroded and closed in negative territory, falling more than 150 points, Monday as the bellwether electronics sector encountered profit taking leading the broader market to move lower, dealers said.

Ahead of the upcoming United States presidential election on Nov. 5, local investors appeared reluctant to chase prices for the moment despite gains in the early morning session with turnover staying low, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 150.38 points, or 0.64 percent, at 23,198.07, after moving between 23,164.42 and 23,547.12. Turnover totaled NT$328.3 billion (US$10.23 billion).

The market opened up 0.46 percent and rose to the day's high, rising almost 200 points in the early morning session, with buying in large cap electronics stocks sparked by a 0.56 percent increase on the tech-heavy Nasdaq index and a 1.07 percent rise on the Philadelphia Semiconductor Index on Friday, dealers said.

However, after the Taiex breached 23,500 points, selling followed as investors rushed to lock in the gains built for tech heavyweights, in particular contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), pushing the broader market below the technical support at 23,299 points, the 10-day moving average by the end of the session, dealers added.

"The selling came as many local investors remain jittery about the U.S. presidential vote, which is too close to call," equity market analyst Andy Hsu said. "So, when the Taiex moved higher, they tended to pocket their earlier gains."

"While some investors rushed to lock in their earlier profits, more stayed on the sidelines and did nothing before the election, which kept turnover thin," Hsu added.

"Today, TSMC remained in focus amid the sell-off as investors fear that once Donald Trump wins the election, his administration could scrap a US$6.6 billion subsidy deal signed between the Biden government and the chipmaker," Hsu said.

Despite a 2.78 percent increase in its American depositary receipts (ADRs) on Friday, TSMC, the most heavily weighted stock on the local market, fell 1.41 percent to close at NT$1,050.00 after hitting a high of NT$1,075.00. TSMC's losses contributed about 120 points to the Taiex's decline, and sent the electronics index and the semiconductor sub-index down by 0.96 percent and 1.18 percent, respectively.

Among other semiconductor stocks, United Microelectronics Corp., a smaller contract chipmaker, lost 1.10 percent to end at NT$49.25, and IC packaging and testing services provider ASE Technology Holding Co. also dropped 0.62 percent to close at NT$161.00.

Bucking the downturn, smartphone IC designer MediaTek Inc. rose 1.52 percent to end at NT$1,335.00 as investors bet on the positive leads it will give an investor conference slated for Wednesday. A foreign brokerage even gave the stock a NT$1,650 target price on the stock.

Artificial intelligence related stocks also came under pressure after earlier gains, adding selling to the broader market, dealers said.

Second to TSMC in terms of market value, iPhone assembler Hon Hai Precision Industry Co., which also rolls out AI servers, dropped 0.46 percent to close at NT$215.00, and Wistron Corp., another AI server maker, fell 1.30 percent to end at NT$113.50.

In addition, Quanta Computer Inc., also producing AI servers, closed unchanged at NT$310.00, while AI graphics card vendor Giga-Byte Technology Co. shed 1.45 percent to end at NT$271.00.

"At a time when TSMC traded in the doldrums, investors tried to seek bargains in select old economy stocks," Hsu said, referring to petrochemical stocks which suffered heavy losses in recent sessions.

In the petrochemical industry, which rose 0.78 percent, Formosa Plastics Corp. rose 3.63 percent to close at NT$48.55, and Formosa Chemicals & Fibre Corp. gained 2.99 percent to end at NT$39.65. In addition, Nan Ya Plastics Corp. grew 2.30 percent to close at NT$42.30, and Formosa Petrochemical Corp. ended up 1.03 percent at NT$49.15.

The transportation industry rose 0.32 percent as the Shanghai Containerized Freight Index (SCFI) stopped an eight-week falling streak last week, Hsu said.

Wan Hai Lines Ltd., one of the leading container cargo shippers in Taiwan, rose 1.96 percent to close at NT$88.60, and rival Yang Ming Marine Transport Corp. ended up 0.44 percent at NT$68.10, while Evergreen Marine Corp., the largest container cargo shipper in the country, fell 0.72 percent to close at NT$206.00.

Elsewhere in the old economy sector, textile brand Far Eastern New Century Corp. lost 0.66 percent to close at NT$37.60, and Eclat Textile Co. ended down 0.73 percent at NT$543.00.

Meanwhile, food supplier Uni-President Enterprises Corp. rose 1.01 percent to close at NT$89.80, while Taisun Enterprise Corp. lost 0.49 percent to end at NT$20.15.

In the financial sector, which lost 0.12 percent, Fubon Financial Holding Co. lost 0.33 percent to close at NT$91.90, while Cathay Financial Holding Co. gained 0.43 percent to end at NT$69.30.

"Before the U.S. vote, the local stock market is expected to continue to move in consolidation, but the Taiex could see its next technical support at the 20-day moving average at around 22,970 points," Hsu said.

"In addition, several megatech stocks on the U.S. markets are scheduled to report their earnings this week, so it deserves watching," Hsu added, referring to companies such as Google, Meta and Apple.

Despite the fall in the Taiex, foreign institutional investors bought a net NT$8.01 billion worth of shares on the main board Monday, according to the TWSE.