TAIPEI (CNA) — Shares in Taiwan came under pressure on Dec. 18 as investors rushed to cut their holdings following a sharp drop on Wall Street overnight, dealers said.
Selling focused on the bellwether electronics sector, particularly on large cap stocks, and spread to the old economy and financial sectors, pushing down the broader market, dealers said. Amid some bargain hunting, however, the main board managed to close above the 9,700-point mark by the end of the session, they said.
The weighted index on the Taiwan Stock Exchange (Taiex) ended down 68.71 points, or 0.70 percent, at 9,718.82, after moving between 9,701.10 and 9,756.67. Turnover totaled NT$94.19 billion (US$3.05 billion) during the session.
The market opened down 0.32 percent and soon moved to the day’s low, following a 500-point dive on the Dow Jones Industrial Average on Dec. 17 amid worry over a slowdown of the U.S. economy, based on data that showed a four-point drop in homebuilder sentiment, dealers said.
As the Taiex moved closer to the nearest technical support of 9,700 points, bargain hunters became active late in the session, picking up market heavyweights such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and iPhone assembler Hon Hai Precision Industry Co., dealers said.
“In the past two trading sessions, the Dow dropped about 1,000 points, so it was no surprise that markets in the region, including the Taiex, fell into negative territory today,” Mega International Investment Services Corp. analyst Alex Huang said.
“Compared with other regional markets and Wall Street, however, the Taiex seemed resilient as its relatively low valuations attracted bargain hunters,” Huang said.
In addition, he said, turnover remained moderate on the Taiex on Dec. 18 despite the decline and the fact that many foreign institutional investors are away for the Christmas and New Year holidays.
The local electronics sector closed up 0.58 percent, with TSMC, the most heavily weighted stock on the local market, dropping 0.45 percent to end at NT$222.50, off a low of NT$220.50.
Hon Hai fell 0.42 percent to end at NT$70.80 after dropping to NT$70.10, while Largan Precision Co., a smartphone camera lens supplier to Apple Inc., shed 1.52 percent to close at NT$3,250.00. Bucking the downturn in the sector, flat panel maker AU Optronics Corp. ended up 0.81 percent at NT$12.40.
Financially troubled Chunghwa Picture Tubes Ltd., which plans to seek bankruptcy protection, fell by the maximum daily 10 percent for the third consecutive session, ending at NT$0.96.
Selling was also seen among non-tech stocks, with Asia Cement Corp. falling 1.15 percent to close at NT$34.40 and Formosa Plastics Corp. dropping 1.31 percent to end at NT$98.00.
The financial sector closed down 1.10 percent, with E. Sun Financial Holding Co. shedding 1.72 percent to end at NT$20.05, and Fubon Financial Holding Co. finishing 1.47 percent lower at NT$47.00.
“We have to follow closely what the U.S. Federal Reserve will say about the economy, to gain more clues about its interest rate hike cycle next year,” Huang said, referring to the Fed’s two-day policymaking meeting that was scheduled to begin Tuesday.
Even if the main board bounces back soon, it will face stiff technical resistance ahead of the 60-day moving average around 9,998 points, he said.
According to Taiex data, foreign institutional investors sold a net NT$5.62 billion worth of shares on the main board Tuesday.
By Frances Huang