Shares in Taiwan moved slightly lower Wednesday, with the bellwether electronics sector serving as an anchor helping the broader market recover most of its earlier losses, dealers said.
However, non-tech stocks remained largely in the doldrums as investors pocketed gains built in recent sessions, with many anxiously waiting for the upcoming United States non-farm payroll data for August, due on Friday, for more clues about the world's largest economy amid an escalation in the global spread of the COVID-19 Delta variant, they said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 16.3 points, or 0.09 percent, at 17,473.99, after moving between 17,415.52 and 17,503.93. Turnover totaled NT$360.213 billion (US$13 billion).
The market opened down 0.15 percent in a knee-jerk reaction to a retreat on U.S. markets, where the Dow Jones Industrial Average fell 0.11 percent and the S&P 500 index lost 0.13 percent overnight in the wake of disappointing manufacturing and services activity data from China, dealers said.
Selling increased to push the Taiex to the day's low with old economy stocks, shipping and petrochemical industries in focus, before bargain hunters moved in to pick up select tech stocks, in particular in the integrated circuit design industry, recouping most of the earlier losses by the end of the session, they said.
"The U.S. markets continued to dictate the local main board today as investors at home and abroad appeared unhappy with China's latest manufacturing activity data," Hua Guan Securities Consulting analyst Fan Cheng-hung said.
On Tuesday, China reported its Purchasing Managers' Index (PMI) at 50.1, below the expected 50.2. Moreover, China's non-manufacturing PMI fell to 47.5 in August, down from 53.3 in July, marking the first contraction since early 2019.
In addition, the United States reported that the Chicago PMI released by ISM-Chicago dropped from 73.4 in July to 66.8 in August.
"These data showed an interruption caused by the escalation of the Delta variant, which continues to haunt market sentiment worldwide," Fan said.
"It was no surprise the Taiex suffered losses throughout the session. But, the silver lining was that IC design stocks bounced back from their recent weakness, capping the downturn of the Taiex," Fan said.
Among the gaining IC design stocks, shares in smartphone chip designer MediaTek Inc. rose 2.89 percent to close at NT$927.00, off an earlier low of NT$906.00.
Moreover, Novatek Microelectronics Corp., a supplier of drive ICs for flat panel use, added 3.12 percent to end at NT$463.00 after hitting a low of NT$447.00; and Asmedia Technology Inc., a high-speed interface IC designer, soared 8.92 percent to close at NT$2,260.00, coming off a low of NT$2,055.00.
"I prefer to say the gains enjoyed by these IC designers were technical in nature. They face rising costs after contract chipmakers such as Taiwan Semiconductor Manufacturing Co. (TSMC) raised product prices," Fan said.
Among contract chipmakers, TSMC, the most heavily weighted stock on the local market, lost 0.16 percent to end at NT$613.00, while United Microelectronics Corp., the second largest contract chipmaker after TSMC, rose 1.58 percent to close at NT$64.10.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. ended unchanged at NT$110.00.
"Shipping stocks came under pressure as the positive leads of rising freight rates had been priced in. Investors simply locked in their recent gains," Fan said. "Today's higher turnover was due to heavy selling suffered by shipping stocks."
In the industry, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, lost 5.51 percent to close at NT$128.50, and rival Yang Ming Marine Transport Corp. shed 6.37 percent to end at NT$125.00.
The petrochemical sector fell 1.17 percent in the wake of falling international crude oil prices overnight with Formosa Plastics Corp. down 2.44 percent to close at NT$100.00, and Formosa Petrochemical Corp. down 1.12 percent to end at NT$96.70.
"Investors should pay close attention to the upcoming U.S. jobs report for August, which could influence the Federal Reserve's monetary policy," Fan said.
Despite the falling Taiex, foreign institutional investors bought a net NT$14.57 billion worth of shares on the main board, according to the TWSE.
Source: Focus Taiwan News Channel