Shares in Taiwan came under pressure on Monday as market sentiment continued to be clouded by worries of a rate hike cycle by the U.S. Federal Reserve after a loss suffered by U.S. markets at the end of last week ahead of a two-day Fed policymaking meeting, dealers said.
The bellwether electronics sector drove the broader market to trend lower, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), while the financial sector trimmed all of its earlier losses, lending some support to the main board, dealers added.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 92.84 points, or 0.63 percent, at 14,612.59 after moving between 14,538.66 and 14,658.46. Turnover totaled NT$151.55 billion (US$4.94 billion), the lowest level so far this year.
The market opened down 0.31 percent on a correction from a rally on Friday, when the Taiex rose 1.05 percent, and selling escalated with large semiconductor stocks in focus as investors took cues from a 0.70-percent decrease on the tech-heavy Nasdaq index and a 0.86-percent fall on the Philadelphia Semiconductor Index on Friday after Washington reported the producer price index (PPI) for November which was higher than expected, dealers said.
"The PPI data raised concerns over a move by the Fed in the upcoming meeting, pushing down tech stocks on the U.S. markets Friday," Moore Securities Investment Consulting analyst Adam Lin said. "It was not surprising that large-cap electronics stocks here followed suit and led the downturn today."
"Ahead of the Fed meeting, many investors preferred to stay on the sidelines so today's turnover shrank a lot to a low for this year," Lin said.
The electronics sector lost 0.79 percent with the semiconductor sub-index falling 1.26 percent after TSMC, the most heavily weighted stock in the local market, fell 1.35 percent to close at NT$475.00, off a low of NT$473.50. TSMC's losses contributed about 55 points to the Taiex decline Monday.
"In addition to rate hike fears, semiconductor stocks also remained haunted by weakening global demand which has led to the current inventory adjustments," Lin said. "As TSMC's losses continued, the broader market had little chance of climbing back up today."
Among other semiconductor heavyweights, smartphone IC designer MediaTek Inc. fell 2.33 percent to end at NT$712.00, IC packaging and testing services provider ASE Technology Holding Co. fell 1.41 percent to close at NT$98.10, while United Microelectronics Corp., a smaller contract chipmaker, ended unchanged at NT$43.50.
Bucking the downturn, DRAM chip supplier Nanya Technology Corp. increased 2.05 percent to close at NT$54.80, and power management IC designer Silergy Corp. rose 1.89 percent to end at NT$486.00.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. outperformed the broader market and closed unchanged at NT$102.00 on hopes about its efforts in electric vehicle development, and its wireless connection device subsidiary Pan-International Industrial Corp. rose 1.94 percent to end at NT$39.50.
"The financial sector managed to recoup its earlier losses as investors believed that massive COVID-19 compensation paid by insurance firms in recent months represented one-time losses only and the firms' bottom lines will improve next year," Lin said.
The financial sector edged up 0.05 percent to close at 1,526.47, off a low of 1,504.69 with Fubon Financial Holding Co. ending unchanged at NT$57.50 after recovering from a low of NT$54.80, and Cathay Financial Holding Co. falling 0.24 percent to close at NT$41.00, off a low of NT$40.15. In addition, CTBC Financial Holding Co. rose 0.88 percent to end at NT$22.90.
Select biotech stocks attracted buying as China eased its COVID-19 restrictions, which has prompted many Chinese people to stock up on medicine, benefiting Taiwanese drug suppliers in the Chinese market, Lin said.
Among them, Chunghwa Chemical Synthesis & Biotech Co. soared 10 percent, the daily maximum increase, to close at NT$25.30, and China Chemical & Pharmaceutical Co. surged 7.51 percent to end at NT$64.40.
"Washington is scheduled to release the November consumer price index (CPI) data Tuesday and that is worth watching for more clues about what the Fed will do," Lin said.
According to the TWSE, foreign institutional investors sold a net NT$6 billion worth of shares on the main board Monday.
Source: Focus Taiwan News Channel