Taiwan shares end higher, but gains limited by trade war worries

TAIPEI (CNA) Shares in Taiwan moved higher Wednesday but the gains were capped amid lingering concerns over global demand as the trade war between the United States and China shows no signs of being resolved, dealers said.

The bellwether electronics sector was behind the latest upturn, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC).

But many tech stocks, like the broader market, were hit by selling later in the session as investors remained concerned about how foreign institutional investors were reacting to the trade dispute after a recent sell-off, dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE), the Taiex, ended up 32.50 points, or 0.31 percent, at 10,461.62, after moving between 10,446.51 and 10,541.29. Turnover was NT$96.70 billion (US$3.08 billion).

The market opened up 0.66 percent and rose to the day’s high minutes later helped by strong showings by markets in the U.S., including a 2.06 percent rise in the Dow Jones Industrial Average and a 2.65 percent rise in the tech-heavy Nasdaq overnight, dealers said.

The substantial gains in the U.S. came after Fed Chairman Jerome Powell hinted that the Fed was open to easing its monetary policy to support economic growth.

Once the Taiex breached the 10,500-point mark, however, selling emerged as investors rushed to lock in earlier gains, dealers said.

“Despite Powell’s remarks, there are few signs of any immediate cut in the Fed’s key interest rates,” Mega International Investment Services Corp. analyst Alex Huang.

“Investors in the U.S. simply seized on Powell’s words as a reason to hunt bargains after a recent sell-off.” The Fed has scheduled a policymaking meeting for next week.

“Taipei’s reaction to the surging Dow appeared muted as did that of other major regional markets because market sentiment remained cautious over escalating trade tensions between the U.S. and China,” Huang said.

It was thanks to TSMC, which still remained above its previous closing level throughout the session despite profit taking, that the market closed in positive territory, Huang said.

TSMC, the most heavily weighted stock in the local market, rose 0.86 percent to close at NT$235.00 after hitting a high of NT$238.00, with 29.08 million shares changing hands.

Led by TSMC’s gains, the bellwether electronics sector ended up 0.33 percent and the semiconductor sub-index closed up 0.76 percent.

Among other IC stocks that gained ground, IC designer MediaTek Inc. rose 0.64 percent to end at NT$313.00, off a high of NT$319.50, and IC packaging and testing services provider ASE Technology Holding Co. added 1.69 percent to close at NT$60.00, off a high of NT$60.20.

Bucking the upturn on the broader market, iPhone assembler Hon Hai Precision Industry Co. fell 1.11 percent to end at NT$71.00 after hitting a high of NT$72.80, and Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., lost 1.36 percent to close at NT$3,615.00, off a high of NT$3,810.00.

Buying in select old economy stocks also lent support to the Taiex with food brand Uni-President Enterprises Corp. closing 0.74 percent higher at the day’s high of NT$81.50, and Formosa Plastics Corp. rising 0.92 percent to close at the day’s high of NT$110.00.

In the financial sector, which ended down 0.17 percent, Fubon Financial Holding Co. lost 1.82 percent to close at NT$43.10, and Cathay Financial Holding Co. fell 0.84 percent to end at NT$41.10.

“Due to trade war concerns, foreign institutional investors have been cutting their holdings in equities here in recent sessions,” Huang said. “Their trading has dictated local investors’ mood.”

According to the TWSE, foreign institutional investors sold a net NT$524.61 million in shares Wednesday after a net sell of NT$1.59 billion in the previous two sessions. In May, foreign institutional investors registered a net sell of NT$144.92 billion.

By Frances Huang