TAIPEI — Shares in Taiwan lost ground yesterday, ending below 8,000 points, as investors took cues from a weakening Wall Street overnight amid fears that the U.S. Federal Reserve will scale back its liquidity easing measures, dealers said.
The financial sector led the downside after the Ministry of Finance expressed strong opposition to a proposal for Chang Hwa Commercial Bank to acquire Taishin Commercial Bank, a flagship unit of Taishin Financial Holding Co., dealers said.
Selling also focused on select large-cap electronics stocks as the tech-heavy Nasdaq index lost 1.5 percent overnight, they added.
“Since the local index breached the 8,000 point mark yesterday, the market has been faced with stiff technical resistance,” Concord Securities analyst Kerry Huang said. “Investors simply seized a falling Wall Street as an excuse to sell today.’
The weighted index closed down 71.64 points, or 0.89 percent, at the day’s low of 7,957.46, off an early high of 8020.52, on turnover of NT$77.59 billion.
The market opened down 0.11 percent, encountering downward pressure in reflection of Wall Street’s latest losses after the U.S. Fed released the minutes of its January policymaking meeting, which pointed to the likelihood that the U.S. central bank will cut its bond buying program sooner than expected, dealers said.
Selling escalated, sending the index even lower at the end of the session as the financial sector fell back from the gains posted in the previous session, due to MOF’s rejection of the merger proposal between Chang Hwa Bank and Taishin Bank, dealers said.
The financial subindex closed down 2.0 percent, with Chang Hwa Bank falling 2.59 percent to end at NT$16.90, and Taishin Financial Holding shedding 3.94 percent to close at NT$12.20.
“The financial sector served as a driver of yesterday’s gains. Due to its relatively high valuation, the merger issue was a catalyst for investors to take profit,” Huang said.
“But the reduced turnover showed selling in the sector today and was not intolerable as many investors are still looking forward to further financial exchanges across the Taiwan Strait to strengthen local banks’ profitability,” Huang said.
In the electronics sector, which closed down 0.91 percent, Taiwan Semiconductor Manufacturing Co., the world’s largest contract chip maker, fell 1.83 percent to end at NT$107.00, and Hon Hai Precision Industry Co., which assembles iPad and iPhone for Apple, dropped 1.89 percent to NT$83.20.
However, smartphone vendor HTC Corp. rose 0.54 percent to end at NT$279.00, making a comeback from its losses the previous day, on a technical rebound.