Local bourse retreats on Wall Street losses


CNA

TAIPEI — The local bourse pulled back on mild profit-taking yesterday as investors took cues from an overnight fall on Wall Street, dealers said.

Selling emerged in certain local electronics stocks after U.S.-based personal computer vendor Dell Inc. issued a cautious sales outlook for the quarter to October after Wall Street closed, they said.

Some old economy stocks, in particular the textile sector, also suffered obvious sell-offs as investors locked in profits after recent gains, they added.

The weighted index closed down 10.23 points, or 0.13 percent, at 7,496.58, after moving between 7,461.07 and 7,501.26, on turnover of NT$62.28 billion.

The market opened down 0.15 percent and moved to the day’s low in a knee-jerk reaction to the overnight Wall Street fall, but some bargain hunting emerged to limit the losses at the end of the session, dealers said.

“There were fears that U.S. high tech shares would take a beating on Wall Street later in the day due to Dell’s disappointing forecast,” Mega Securities analyst Alex Huang said.

Dell forecast that sales for third quarter to October will fall 2-5 percent from the previous quarter to a range between US$13.8 billion and US$14.2 billion, lower than the market estimate of US$14.9 billion.

“To avoid losses incurred by local high tech stocks over the next session, investors here simply lowered their holdings in the sector soon after the local bourse opened,” Huang said.

Among the losing electronics stocks in the Dell supply chain, contract notebook computer maker Quanta Computer fell 1.41 percent to close at NT$77.10, and rival Compal Electronics shed 1.79 percent to end at NT$27.50.

But Acer Inc., one of the world’s leading personal computer vendors, closed up 0.57 percent at NT$26.25 on a technical rebound from a slump in the past two sessions caused by lower-than-expected second quarter results.

“The selling, however, in local shares was not intolerable at all as the local bourse has been laggard compared with its counterparts in the region,” Huang said. “That’s why the market witnessed some technical support after the index fell below 7,500 points.”

Huang said it is possible for the local bourse to continue to move in a narrow range ahead of the next policymaking meetings scheduled by the U.S. Federal Reserve and the European Central Bank for September.

At the end of the session, the textile sector had suffered the heaviest losses among the eight major sectors of the market, finishing down 3.5 percent. Cement stocks fell 0.4 percent, while plastics and chemicals, and machinery and electronics shares lost 0.2 percent.

Bucking the downtrend of the broader market, financials rose 0.3 percent, construction shares added 0.2 percent, and foodstuffs, along with paper and pulp stocks, gained 0.1 percent.