Local bourse weakens amid lingering concerns over Cyprus


CNA

TAIPEI — Shares in Taiwan ended lower Friday in reflection of a falling Wall Street overnight amid lingering concerns over the financial situation in Cyprus, dealers said.

While the broader market trended lower, select high-tech stocks such as Hon Hai Precision Industry Co., which is part of Apple Inc.’s supply chain, remained resilient on hopes that the U.S. electronics giant will launch new iPhone and iPad models in June, dealers said.

The weighted index closed down 15.62 points, or 0.19 percent, at the day’s low of 7,796.22, off an earlier high of 7,832.59. Turnover totaled NT$64.71 billion (US$2.17 billion) during the session.

The market opened down 0.32 points and kept consolidating throughout the session as investors took cues from a pullback on Wall Street overnight, dealers said.

“The Cyprus issue came back to haunt investors at home and abroad,” Hua Nan Securities analyst Henry Miao said. “Investors here preferred to stay on the sidelines as they feared that Wall Street would suffer a major correction sometime soon, after its recent strong showing, due to uncertainty over the eurozone.”

The European Central Bank said it might cut off emergency funds to Cyprus after March 25, even as the financially troubled country is struggling to map out measures to avoid a possible a collapse.

Miao said investors are also worried that Washington will fail to resolve its fiscal difficulties. If the U.S., the world’s largest economy, cuts spending, the global economy will be hurt, he added.

“So, the local market remained in the doldrums as there were no major leads to pull the index out of its narrow trade range,” Miao said.

Foreign institutional investors continued to unload their holdings, using Wall Street’s weakness as an indicator, Miao said.

It was no surprise that many large cap stocks remained lackluster in the absence of foreign institutional support, he said.

Foreign institutional investors served as net sellers of NT$2.57 billion worth of local shares by the end of the session.

Among the losing old economy stocks, textile maker Far Eastern New Century Corp. fell 1.14 percent to close at NT$30.40, while Nan Ya Plastics Corp. lost 1.15 percent to end at NT$51.70.

In the high-tech sector, Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chip-maker, shed 0.71 percent to close at NT$98.00, while rival United Microelectronics Corp. ended unchanged at NT$11.10.

Bucking the downtrend of the broader market, Hon Hai Precision rose 0.97 percent to close at NT$82.90, and metal casing maker Foxconn Technology Co., which is an Apple supplier, gained 0.62 percent to finish at NT$81.40.

“Even if the market stages a technical rebound, it will not be easy for the index to overcome the stiff technical resistance ahead of 7,900 points. I expect the local bourse will continue to move in a narrow range over the next few sessions,” Miao said.