Taiex ends down after initial gains eroded on valuation concerns

Taipei, July 6 (CNA) Shares in Taiwan closed lower Monday, falling into negative territory after an initial upturn as investors feared high valuations in the tech sector would trigger a major pullback, dealers said.

The Taiex, the Taiwan Stock Exchange's benchmark index, ended down 224.23 points, or 0.48 percent, at 46,556.39 after moving between 46,431.38 and 47,396.30. Turnover totaled NT$1.02 trillion (US$31.89 billion).

"After the market's strong showing recently, there are growing concerns over possibly major technical corrections," Taishin Securities Investment Advisory analyst Tony Huang said.

In the first half of this year, the Taiex soared almost 60 percent amid AI-driven buying.

"It was no surprise that tech stocks came under pressure today after the Taiex rose early in the session, as investors rushed to pocket gains built in tech stocks," Huang said.

Among AI-related tech stocks that lost ground, power management solution provider Delta Electronics Inc. shed 3.86 percent to close at NT$1,995.00, and Yageo Corp., the third largest multi-layer ceramic capacitor (MLCC) maker, lost 3.83 percent to end at NT$1,005.00.

"Fortunately, TSMC (Taiwan Semiconductor Manufacturing Co.) remained resilient to cap the losses on the broader market as many investors stayed upbeat that the contract chipmaker will give positive leads from its investor conference (slated for July 16)," Huang said.

TSMC, which accounts for over 40 percent of total market value, rose 0.61 percent to close at NT$2,460.00, helping shave 120 points off the Taiex's overall decline for the day.

IPhone assembler Hon Hai Precision Industry Co. gained 0.62 percent to close at NT$242.00 after reporting its highest sales ever for the second quarter, while Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., lost 3.25 percent to end at NT$4,135.00 as its June revenue dipped to a 13-month low.

While the electronics index fell 0.68 percent, "buying rotated to select non-tech stocks on their relatively cheap prices," Huang said.

In the old economy sector, food brand Uni-President Enterprises Corp. rose 1.97 percent to close at NT$77.80, and cooking oil supplier Great Wall Enterprise Co. gained 1.38 percent to end at NT$58.80.

In addition, Shihlin Electric & Engineering Corp. added 1.47 percent to close at NT$241.50, and Teco Electric Machinery Co. ended up 4.43 percent at NT$73.10.

In the financial sector, which rose 1.09 percent, CTBC Financial Holding Co. gained 1.13 percent to close at NT$71.40, and Fubon Financial Holding Co. added 0.41 percent to end at NT$121.50. But, Cathay Financial Holding Co. closed down 0.21 percent at NT$93.40.

"Ahead of its investor conference, TSMC could attract more interest amid optimism toward its business outlook to push up the broader market. But, with the Taiex moving closer to 50,000 points, heavy pressure could emerge," Huang said.

According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$25.50 billion in shares on the market Monday.