Taiex recoups part of losses before MSCI adjustments take effect

Taipei, Aug. 31 (CNA) Shares in Taiwan ended lower Monday despite a late rally as bargain hunting emerged ahead of an increase in the local market's weighting under the latest MSCI regular index review, dealers said.

The Taiex, the Taiwan Stock Exchange's benchmark index, ended down 202.98 points, or 0.44 percent, at 46,128.47, off a low of 45,450.21. Turnover totaled NT$1.20 trillion (US$37.97 billion).

The market came under pressure initially after U.S. stocks fell Friday, following hawkish remarks by Federal Reserve Chairman Kevin Warsh at the economic symposium in Jackson Hole, dealers said.

The early downturn also reflected a spike in crude oil prices following renewed military strikes in the Middle East, they said.

"However, MSCI's weighting adjustments prompted foreign passive funds to raise their holdings before the changes took effect," Concord Securities analyst Kerry Huang said.

MSCI announced its latest index adjustments on Aug. 12, raising Taiwan's weighting in all three of its major indexes, with the changes set to take effect after the market's close on Monday.

"Moreover, the Taiex found technical support as it moved closer to 45,438, its 10-day moving average," Huang said.

Huang said that while Monday's sell-off focused on major chip stocks after the Philadelphia Semiconductor Index plunged 3.47 percent Friday, several of the stocks recovered from their early lows.

Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), which accounts for more than 40 percent of total market value, fell only 0.62 percent to close at NT$2,405.00.

Smartphone IC designer MediaTek Inc. lost 1.51 percent to end at NT$3,925.00, while ASIC designer Alchip Technologies Inc. recovered from early weakness to close up 0.25 percent at NT$4,075.00.

Outside the semiconductor industry, power management solutions provider Delta Electronics Inc. rose 0.55 percent to end at NT$1,840.00, while iPhone assembler and AI server maker Hon Hai Precision Industry Co. closed down 1.19 percent at NT$250.00.

Printed circuit board supplier Unimicron Technology Corp. tumbled 10 percent to close at NT$999.00 after prosecutors launched an investigation into allegations that the company relabeled some products made in China as originating from Taiwan.

With the petrochemical index up 3.51 percent, Nan Ya Plastics Corp. soared 10 percent to close at NT$242.50, while Formosa Plastics Corp. rose 5.58 percent to end at NT$66.20.

Shipping stocks also bucked the broader downturn on rising freight rates, dealers said. Evergreen Marine Corp., Taiwan's largest container shipper, added 0.86 percent to close at NT$233.50, while rival Yang Ming Marine Transport Corp. rose 5.87 percent to end at NT$59.50.

The financial sector gained 1.88 percent, with Cathay Financial Holding Co. rising 4.74 percent to close at NT$110.50.

"Investors should watch how the Unimicron case develops. As the stock has a high weighting in several ETFs, the impact is unlikely to be confined to a single stock," Huang said.

According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$14.39 billion of shares on the market Monday.