Taiwan shares end below 11,000-point mark amid trade friction fears

Taipei, Shares in Taiwan moved lower Friday to close below the 11,000-point mark as market sentiment remained bothered by escalating trade friction between the United States and China, dealers said.

Selling focused on large-cap electronics stocks led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), which pushed down the broader market, while buying rotated to non-high-tech stocks, in particular in the cement and food sectors, as well as the financial sector, lending some support to the main board, the dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE), or Taiex, ended down 44.39 points, or 0.40 percent, at 10,983.68, after moving between 10,972.25 and 11,033.89, on turnover of NT$123.33 billion (US$4.02 billion).

The market opened down 0.16 percent on follow-through selling from a session earlier, when the Taiex closed down 0.43 percent, and selling increased as investors seized on the trade dispute between Washington and Beijing to cut their holdings in the bellwether electronics sector, the dealers said.

But with the Taiex moving closer to the nearest technical support level at around the 20-day moving average of 10,972, the main board was lifted slightly by bargain hunting by the end of the session, they said.

"There are no signs that the U.S. and China will resolve the current dispute any time soon," KGI Securities analyst Phil Chu said.

"Therefore, investors have fears that trade friction will get worse, impacting the global financial markets, including Taiwan."

Such fears were raised by the latest moves by Washington and Beijing to impose tariffs on each other's goods worth US$16 billion, effective Aug. 23.

Amid caution, many investors stayed on the sidelines, sending Friday's turnover lower than the average of NT$148 billion in the previous 20 trading sessions, Chu said.

"Today, investors simply used the trade issue as an excuse to unload liquid large-cap stocks such as TSMC, allowing them to pocket cash for the moment," Chu said.

TSMC, the most heavily weighted stock in the local market, fell 0.81 percent to close at NT$245.00, with 15.87 million shares changing hands. Led by TSMC, the bellwether electronics sector closed down 0.79 percent and the semiconductor sub-index ended down 0.82 percent.

Also in the high-tech sector, smartphone camera lens maker Largan Precision Co. lost 0.39 percent to close at NT$5,080.00 and PC brand Asustek Computer Inc. dropped 0.56 percent to end at NT$268.00.

Among the firms that rolled out passive components such as chip resistors and multi-layer ceramic capacitors (MLCC), Yageo Corp. shed 9.58 percent to end at NT$651.00, and Walsin Technology Corp. lost 9.36 percent to end at NT$271.00.

Bucking the downturn on the broader market, Taiwan Cement Corp. rose 2.47 percent to close at NT$41.50, food brand Uni-President Enterprises Corp. gained 2.39 percent to end at NT$72.70 and Mega Financial Holding Co. added 1.15 percent to close at NT$26.35 on rotational buying.

"We also have to watch closely whether the Taiex will manage itself to continue to stand above the 20-day moving average support, or more losses are possible at a time of unfavorable external factors like trade disputes," Chu said.

"In addition to the trade issue, more corporate earnings will be due by Aug. 14, so more uncertainty remains in place," Chu said.

According to the TWSE, foreign institutional investors sold a net NT$1.79 billion-worth of shares on the main board Friday.

Source: Focus Taiwan News Channel