Taiwan shares end down amid geopolitical concerns

Taipei Shares in Taiwan moved lower Tuesday but still managed to end above the 10,800-point mark, as selling was triggered by rising geopolitical concerns as drone attacks on oil production facilities in Saudi Arabia late last week caused a spike in international crude oil prices, dealers said.

Large-cap stocks in both the high-tech and non-electronics sectors faced downward pressure during most of the session, because investors lowered their holdings ahead of the conclusion of a two-day policymaking meeting scheduled by the Federal Reserve to open later in the day, the dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE), or Taiex, closed down 23.63 points, or 0.22 percent, at 10,874.50, after moving between 10,866.43 and 10,912,23, on turnover of NT$114.56 billion (US$3.7 billion).

The market opened up 0.10 percent and moved to the day’s high on follow-through buying from a session earlier, when the Taiex ended up 0.65 percent.

However, with the Taiex breaching the 10,900-point mark in the early morning session, investors started to move to the sell side and pocket their gains to push down the main board into negative territory by the end of the session, the dealers said.

“The selling reflected the losses suffered by the U.S. markets overnight as investors grew more concerned about the geopolitical situation after the drone attacks on Saudi Arabia,” Ta Chan Securities Investment consulting analyst Jerry Chen said.

On Monday, the Dow Jones Industrial Average closed down 0.52 percent and the tech-heavy Nasdaq index ended down 0.28 percent due to the tension in the Middle East.

Overnight, West Texas Intermediate futures in the U.S. market soared more than 14 percent, marking the biggest one-day gain since 2008.

“The spike in international crude oil prices has raised fears that the higher energy prices will slow the pace of global economic growth.” Chen said.

“It was no surprise that investors at home and abroad preferred to hold a cautious attitude for the moment,” Chen said. “However, as the local equity market remained awash in liquidity, the Taiex appeared resilient and still ended above the 10,800-point mark today, down only moderately.”

Selling was seen across the board, with the bellwether electronics sector down only 0.09 percent, as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, fell 0.19 percent to close at NT$265.00, outperforming the broader market.

Bucking the downturn on the main board, dynamic random access memory (DRAM) chip maker Nanya Technology Corp. rose 4.99 percent to close at NT$82.00 and integrated circuit designer MediaTek Inc. added 0.26 percent to end at NT$383.00. Both lent support to the Taiex to prevent the index from falling further.

Also in the tech sector, iPhone assembler Hon Hai Precision Industry Co. lost 1.84 percent to close at NT$74.60.

The stock faced heavier selling soon after the local equity market opened after Terry Gou (???), founder of the company, announced late Monday that he will not run for Taiwan’s presidency in January but will continue to participate in political affairs.

Gou stepped down as chairman of Hon Hai in June after he announced his bid in mid-April for the presidential election scheduled for Jan. 11, 2020. Liu Young-way (???), who was previously in charge of Hon Hai’s semiconductor operations, took the helm after Gou.

Among the falling old economy stocks, the petrochemical sector suffered profit taking from gains seen Monday after soaring crude oil prices caused by the attacks in Saudi Arabia.

Formosa Petrochemical Corp. lost 1.92 percent to close at

NT$102.00, Formosa Chemicals & Fibre Corp. fell 1.53 percent to end at NT$90.10, and Formosa Plastics Corp. dropped 0.20 percent to close at NT$97.80, while Nan Ya Plastics Corp. rose 0.57 percent to end at NT$71.00.

In the mixed financial sector, which closed down 0.01 percent, Fubon Financial Holding Co. gained 0.55 percent to end at NT$45.55, and CTBC Financial Holding Co. lost 0.24 percent to close at NT$21.00, while CTBC Financial Holding Co. ended unchanged at NT$29.20.

“Many investors are waiting for a decision by the Fed and eager to hear the Fed’s comments on the economy for more clues about how the central bank will adjust its monetary policy,” Chen said.

The market has widely anticipated that the Fed will cut its key interest rates this week and speculated that more cuts will follow, he said.

Despite the fall in the index, foreign institutional investors bought a net NT$5.33 billion-worth of shares on the main board Tuesday, according to the TWSE.

Source: Focus Taiwan News Channel