Taiwan shares down led by tech stocks after Nasdaq plunges

Taipei, Shares in Taiwan moved lower Monday as electronics stocks, in particular some component stocks, came under pressure following heavy losses on the tech-heavy Nasdaq index on the U.S. market last week, dealers said.

In addition, market sentiment has turned cautious about possible technical resistance ahead of the psychological 11,100-point level, while thin turnover also indicated that many investors were reluctant to trade before the start of the U.S. Federal Reserve's two-day policymaking on Tuesday, dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE) closed down 42.24 points, or 0.38 percent, at 11,033.54, after moving between 11,001.15 and 11,080.41. Turnover totaled NT$125.21 billion (US$4.09 billion) during the session.

The market opened down 3.08 points and moved in a narrow trading range early in the session but heavier selling emerged as investors disposed of their electronics stocks in the wake of a 1.46 percent dive on the Nasdaq on Friday, dealers said.

Selling on the Taiex focused on stocks of some passive electronics manufacturers, such as those that make chip resistors and multilayer ceramic capacitors, amid fears over a possible supply glut next year as major suppliers in the global market are gearing to expand production capacity, dealers said.

The benchmark electronics sector closed down 0.65 percent, underperforming the broader market.

"With the Taiex moving closer to the 11,100-point mark after its recent gains, it was not surprising that investors preferred to remain cautious about a possible major pullback," Hua Nan Securities analyst Kevin Su said.

He said the thin trading volume was indicative of such caution.

"They simply seized on the losses suffered by U.S. tech stocks on Friday and cut their holdings in Taiwanese tech firms, especially passive component makers, to pocket their earlier gains," Su said.

Among the falling passive component stocks, Yageo Corp. and Walsin Technology Corp. fell by the maximum daily 10 percent to close at NT$840.00 and NT$382.00, respectively, after a brokerage on Sunday raised concerns about a supply glut next year.

Selling was also seen among select tech heavyweights, including Largan Precision Co., a smartphone camera lens supplier to Apple Inc., which fell 1.52 percent to close at NT$5,180.00, and integrated circuit designer MediaTek Inc., which dropped 2.80 percent to end at NT$260.00.

"However, Taiwan Semiconductor Manufacturing Co. (TSMC) remained resilient, helping to prevent the broader market from falling further today, and the Taiex was able to hold above 11,000 points at the close," Su said.

Contract chipmaker TSMC, the most heavily weighted stock on the local market, rose 0.41 percent to finish at NT$245.50 with 22.77 million shares changing hands.

The non-high tech sector closed mixed, with Shinkong Synthetic Fiber Corp. falling 2.26 percent to close at NT$12.95, and Taiwan Cement Corp. finishing 0.99 percent higher at NT$40.70.

In the financial sector, CTBC Financial Holding Co. fell 0.73 percent to close at NT$20.50, while Cathay Financial Holding Co. dropped 0.38 percent to end at NT$52.20.

"Investors appeared cautious before the start of the Fed's meeting," Su said. "In addition, they are waiting for the U.S. manufacturing and unemployment data later this week, which is likely to move global financial markets."

According to the TWSE, foreign institutional investors bought a net NT$873 million worth of shares on the main board Monday.

Source: Focus Taiwan News Channel