Taiwan shares ends 7-session rising streak after Powell speech

Taipei, Nov. 10 (CNA) Shares in Taiwan ended a seven-session rising streak Friday as the bellwether electronics sector came under pressure in the wake of losses suffered by tech stocks on US markets overnight, dealers said.

Market sentiment turned cautious after US Federal Reserve Chair Jerome Powell made hawkish comments on the bank’s monetary policy, pushing up US treasury yields, which compromised the appetite of investors at home and abroad to hold tech stocks, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 62.98 points, or 0.38 percent, at 16,682.67 after moving between 16,651.23 and 16,725.94. Turnover totaled NT$230.24 billion (US$7.13 billion).

The market opened down 0.12 percent and weakness continued until the end of the session as investors took their cue from a 0.94 percent decline on the tech-heavy Nasdaq index Thursday, after Powell said in a speech at the International Monetary Fund that the Fed was ” not confident” that it has done enough to bring inflation down, dealers said.

Tech stocks, in particular in the local semiconductor industry led the downturn throughout the session, while shares in major old economy industries such as the transportation sector, also moved lower to increase selling on the broader market, dealers added.

The bellwether electronics sector lost 0.35 percent with the semiconductor sub-index down 0.28 percent.

“Powell’s speech raised concerns that the Fed will resume rate hikes sometime in the near future after a pause for the second consecutive meeting in early November,” Concord Capital Management Corp. analyst Lu Chin-wei said.

“Such concerns prompted investors to lock in profits built over the past seven sessions.”

Before Friday, the Taiex had soared 744.38 points, or 4.65 percent in the previous seven trading sessions on the back of optimism that the Fed had finished its rate hike cycle.

“Powell’s remarks pushed up US treasury yields, which made tech stocks less attractive” compared with their relatively low dividend yields,” Lu said. The US benchmark 10-year treasury yield was up by 13 basis point at 4.636 percent Thursday.

IC designers led the local semiconductor industry, the electronics sector as well as the broader market lower as smartphone designer MediaTek Inc., second to contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) in terms of market value, lost 2.32 percent to close at NT$884.00, Lu said.

In the previous seven trading sessions, MediaTek surged 4.99 percent after a move by foreign brokerages to raise their target prices on the stock and the IC designer’s launch of its latest flagship smartphone chipset Dimensity 9300.

Selling in MediaTek spread to other IC designers with Alchip Technologies Ltd., an application specific integrated circuit (ASIC) designer, falling 1.23 percent to end at NT$3,200.00.

Display driver IC designer Novatek Microelectronics Corp. closed down 0.31 percent at NT$481.50, while Global Unichip Corp., another ASIC designer, ended up 0.30 percent at NT$1,670.00.

“Fortunately, TSMC remained resilient or the Taiex would have fallen further as the stock saw strong technical support at around NT$550.00,” Lu said.

TSMC closed unchanged at NT$557.00, while United Microelectronics Corp., a smaller contract chipmaker, lost 0.10 percent to end at NT$48.55.

Large cap tech stocks related to artificial intelligence development also came under pressure as they moved into continued consolidation, Lu said.

Quanta Computer Inc., a leading AI server supplier, fell 2.51 percent to close at NT$213.50, and rival Wistron Corp. dropped 0.51 percent to end at NT$98.10.

Also in the tech sector, iPhone assembler Hon Hai Precision Industry Co., the third largest local cap stock, dropped 0.72 percent to close at NT$97.20, and flat panel makers AUO Corp. and Innolux Corp. shed 1.25 percent and 1.22 percent, respectively, to end at NT$15.80 and NT$12.10.

In the old economy sector, Formosa Plastics Corp. loses 0.77 percent to close at NT$77.70, and Nan Plastics Corp. ended down 0.61 percent at NT$64.90.

In addition, Eclat Textile Co. dropped 1.69 percent to close at NT$583.00, and Makalot Industrial Co., another textile brand, ended down 0.25 percent at NT$398.50.

In the transportation industry, which lost 0.75 percent amid weakening demand for cargo shipping, Wan Hai Lines Ltd., a leading container cargo shipper in Taiwan, lost 2.91 percent to close at TNT$45.00 and rival Yang Ming Marine Transport Corp. dropped 1.31 percent to end at NT$41.30.

The financial sector appeared mixed, down only 0.08 percent with CTBC Financial Holding Co. up 0.59 percent to close at NT$25.50, but Fubon Financial Holding Co. down 0.32 percent to end at NT$61.50.

“Compared with the gains posted in the previous seven sessions, today’s pullback was not intolerable at all so I expect the current technical correction to be short-lived,” Lu said.

“However, investors should pay close attention to the movement of US treasury yields as well as the US dollar, which could influence foreign institutional investors’ strategies.”

According to the TWSE, foreign institutional investors sold a net NT$6.69 billion worth of shares on the main board Friday, with the US dollar rising NT$0.094 to close at NT$32.352 against the Taiwan dollar.