Shares in Taiwan moved lower on Tuesday after reversing earlier gains as the bellwether electronics sector faced profit taking that pushed the broader market into negative territory, dealers said.
While old economy stocks were largely mixed throughout the session, shipping stocks staged a strong technical rebound, helping the local main board avoid some of the selling suffered by tech stocks, they said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 66.43 points, or 0.38 percent, at 17,428.87, after moving between 17,388.37 and 17,559.21. Turnover totaled NT$334.39 billion (US$12.12 billion).
The market opened up 0.22 percent and soon rose to the day's high approaching 17,600 points at one point as large cap tech stocks steamed ahead, dealers said.
However, investors soon shifted to the sell side to take advantage of earlier gains enjoyed by tech heavyweights, including contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), while shipping stocks attracted bargain hunting, offsetting the losses by the end of the session, dealers added.
The electronics sector closed down 1.07 percent with the semiconductor sub-index down 1.26 percent, while the transportation sector, where many major shipping stocks are traded, ended up 6.25 percent.
"Despite the losses today, the Taiex still managed to stay above the 60-day moving average of around 17,398 points. So I think the main board remains technically healthy for now," Cathay Futures Consulting analyst Tsai Ming-han said.
Tsai said the electronics sector continues to dictate the broader market's movement and on Tuesday its weakness sent the Taiex lower.
"A falling TSMC remained a focus today after the stock lent its support to the broader market yesterday," Tsai said. "Following a recent rebound, the stock went into consolidation mode, and so did the whole tech sector."
After rising 1.77 percent on Monday, TSMC, the most heavily weighted stock on the local market, fell 1.27 percent to close at NT$623.00 Tuesday after coming off a high of NT$634.00.
TSMC's selling spread to other semiconductor stocks with United Microelectronics Corp., the second largest contract chipmaker in Taiwan after TSMC, losing 2.43 percent to end at NT$68.20, and memory chip supplier Nanya Technology Corp. shedding 1.81 percent to close at NT$65.20.
Bucking the downturn, shares in smartphone IC designer MediaTek Inc. rose 0.78 percent to end at NT$903.00, and Novatek Microelectronics Corp., a supplier of drive ICs for flat panel use, added 0.23 percent to close at NT$431.00.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. lost 2.25 percent to end at NT$108.50.
"Thanks to the shipping industry, the Taiex's losses were capped," Tsai said. "The strong interest in shipping stocks showed many investors remain willing to trade, triggering rotational buying," Tsai said.
Among the gaining container cargo shipping stocks, Wan Hai Lines Ltd. soared 9.69 percent to close at NT$209.50; Evergreen Marine Corp., Taiwan's largest container cargo shipper, jumped 8.47 percent to end at NT$128.00; and Yang Ming Marine Transport Corp. rose 6.64 percent to close at NT$120.50.
In addition, bulk cargo service provider Sincere Navigation Corp. also gained 1.54 percent to end at NT$36.35.
Elsewhere in the old economy sector, food brand Uni-President Enterprises Corp. lost 1.12 percent to close at NT$70.70, and textile supplier Far Eastern New Century Corp. fell 0.34 percent to end at NT$29.60, while Formosa Plastics Corp. gained 1.21 percent to close at NT$100.50.
In the financial sector, which ended up 0.07 percent, shares in Fubon Financial Holding Co. rose 1.17 percent to close at NT$78.10, while Yuanta Financial Holding Co. lost 0.82 percent to end at NT$24.30.
"As there is no rush for the U.S. Federal Reserve to kick off a rate hike cycle, foreign institutional investors are unlikely to move funds out of the region anytime soon, and the local equity market is expected to ride the wave of ample funds," Tsai said.
Despite the fall in the Taiex, foreign institutional investors bought a net NT$6.15 billion worth of shares on the main board Tuesday, according to the TWSE.
Source: Focus Taiwan News Channel