Shares in Taiwan closed little changed Tuesday after giving up more than 160 points in early gains, while large cap tech stocks showed resilience and prevented the broader market from falling further, dealers said.
Market sentiment was tempered by uncertainty over the U.S. Federal Reserve's monetary policy ahead of the American central bank's two-day policymaking meeting scheduled to open later Tuesday, they said.
The Taiex, the Taiwan Stock Exchange's benchmark index, ended down 2.27 points, or 0.01 percent, at 17,065.97, after moving between 17,026.63 and 17,237.09. Turnover totaled NT$387.22 billion (US$13.91 billion).
The market opened up 0.15 percent and soon rose to the day's high on an overnight rally in markets in the United States, where the Dow Jones Industrial Average, the S&P 500 index and the tech-heavy Nasdaq index all hit all-time highs, dealers said.
But after the Taiex briefly moved above 17,200 points, investors started to move to the sell side to lock in early gains, bringing the Taiex tumbling back down to finish where it started.
"Despite the initial gains, many investors appeared reluctant to chase prices before the Fed concludes its policymaking meeting. Today's profit-taking was understandable," Cathay Futures Consulting analyst Tsai Ming-han said.
"While the market is widely anticipating that the Fed will move to downsize its asset purchases after the meeting, investors still wanted to wait for the actual decision and the Fed's comments about the economy," Tsai said.
In addition to the tapering of its assets, the Fed is also expected to begin raising interests as early as in July 2022.
The electronics index closed down 0.06 percent at 814.15 after hitting a high of 823.68, with the semiconductor sub-index up 0.17 percent.
"The silver lining was that tech heavyweights, in particular TSMC, ended above their previous closes after a recent consolidation, indicating that rotational buying remained active in a market currently awash in liquidity," Tsai said.
TSMC (Taiwan Semiconductor Manufacturing Co.), the most heavily weighted stock in the local market, rose 0.34 percent to close at NT$592.00.
The interest in TSMC spread to other large cap semiconductor stocks.
United Microelectronics Corp., a smaller contract chipmaker, rose 2.43 percent to end at NT$59.00, integrated circuit designer MediaTek Inc. closed 0.65 percent higher at NT$928.00, and IC packaging and testing services provider ASE Technology Holding Co. finished up 0.61 percent at NT$98.80.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. gained 0.94 percent to close at NT$107.50, while Largan Precision Co., a supplier of smartphone camera lenses, lost 2.84 percent to close at NT$2,050.00.
Smartphone brand HTC Corp. shed 5.41 percent to end at NT$68.20 after the company reported a loss per share of NT$0.94, compared with a NT$0.68 loss per share in the second quarter.
Among other falling tech stocks, metal-oxide-semiconductor field-effect transistor (MOSFET) maker Panjit International Inc. tumbled 10 percent, the maximum daily decline, to close at NT$111.50. Novatek Microelectronics Corp., which supplies drive ICs for flat panels, lost 3.11 percent to end at NT$405.50.
"Trading in the old economy sector remained slow by the end of the session after its earlier gains. These old economy stocks simply followed the volatility of the broader market," Tsai said.
Formosa Chemicals & Fibre Corp. lost 0.50 percent to close at NT$80.30, and Formosa Plastics Corp. fell 0.47 percent to end at NT$106.50.
Wei Chuan Foods Corp. added 0.87 percent to NT$28.70, while rival Uni-President Enterprises Corp. shed 0.75 percent to close at NT$67.40.
Bargain hunting pushed up the transportation sector by 2.90 percent, with China Airlines closing 4.70 percent higher at NT$18.95, and EVA Airways gaining 4.33 percent to end at NT$20.50.
"We have to watch closely how the U.S. markets will react to the outcome of the Fed's meeting since it could affect markets outside the U.S. as well as foreign institutional investors' strategies to trade in the region," Tsai said.
Despite the fall in the Taiex, foreign institutional investors bought a net NT$1.96 billion in shares Tuesday, according to the Taiwan Stock Exchange.
Source: Focus Taiwan News Channel