TAIPEI — The local bourse pulled back yesterday amid rising concerns over corporate earnings after the major subsidiaries of the Formosa Plastics Group (FPG), one of Taiwan’s leading conglomerates, reported disappointing results for the first half of this year, dealers said.
Turnover shrank as many investors took to the sidelines, waiting anxiously for the decisions of a policymaking meeting of the European Central Bank (ECB) that will be held later in the day, dealers said.
The weighted index closed down 34.81 points or 0.46 percent at 7,387.78, after moving between 7,376.45 and 7,426.62. Turnover totaled NT$69.47 billion during the session.
The market opened down 0.14 percent on a lack of fresh indications from Wall Street, which was closed for the U.S. Independence Day holiday overnight, dealers said.
Cautious sentiment toward corporate earnings, caused by the FPG units’ worse-than-expected first-half results, weighed on the market and dragged the index below the 7,400 point mark at the end of the session, they said.
“Concerns over global demand were running deeper due to the results of the FPG subsidiaries,” Concord Securities analyst Kerry Huang said. “Soon after the market opened, investors started to pocket the gains they had built in the recent sessions.”
Among the four major FPG subsidiaries, Nan Ya Plastics incurred loss per share of NT$0.13, Formosa Chemicals & Fibre NT$0.44, and Formosa Petrochemical NT$1.13, for the first six months of the year.
Formosa Plastics was the only company among the four major FPG units to post a net profit for the six-month period, with earnings per share of NT$0.93.
“It is possible the ECB will decide at it policy meeting to cut its key interest rates by 0.25 percentage points to boost the economy,” Huang said. “But, uncertainty over the economic fundamentals remains since there are few signs of any immediate rebound.” Despite the downtrend, some bargain hunting emerged in late trade, preventing the broader market from falling further, Huang said, referring to the limited losses suffered by the four FPG units at the end of the session.
Among the four units, Formosa Plastics closed down 0.86 percent at NT$80.40, off an early low of NT$79.90, while Nan Ya Plastics ended 0.54 percent lower at NT$55.50, recovering from an early low of NT$54.50.
At the end of trading, the plastics, chemical, machinery and electronics sectors suffered the heaviest losses among the eight major sectors of the market, finishing down 0.6 percent. Construction stocks fell 0.5 percent, financials lost 0.4 percent, and the paper and pulp, and textile sectors closed down 0.2 percent.
Bucking the downtrend of the broader market, foodstuffs rose 0.8 percent, and the cement sector closed up 0.3 percent.