Taiwan shares end lower as earlier gains eroded

Taiwan shares end lower as earlier gains eroded
Taiwan shares end lower as earlier gains eroded
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Taipei, April 1 (CNA) Shares in Taiwan closed lower Monday as investors shifted to the sell side, taking advantage of the main board’s earlier upturn after a rally in afterhours trading on the US markets, dealers said.

While investors still embrace high hopes that the US Federal Reserve will start a rate cutting cycle in June, the bellwether electronics sector encountered profit taking Monday after a strong showing in the first quarter of the year, pushing the main board above the 20,000 point mark, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 72.12 points, or 0.36 percent, at 20,222.33 after moving between 20,217.58 and 20,387.23. Turnover totaled NT$358.48 billion (US$11.22 billion).

The market opened up 0.12 percent and momentum continued to push the Taiex to the day’s high before selling set in and took a toll on large cap tech stocks, in particular contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), sending the index into negative territory. That weakness continued until the end of the session, dealers said.

“The local stock market moved sharply higher to top 20,000 points in March and staged a significant rally in the first quarter. It was time to take a pause, digesting downward pressure before another takeoff,” Taishin Securities Investment Advisory analyst Tony Huang said.

Q1 performance

In the January-March period, the Taiex soared 2,363.64 points, or 13.18 percent, making the local main board one of the best performers in the world. On Friday, the Taiex closed at another record high of 20,294.45.

“Today, investors simply took their cue from gains in afterhours trading on the US markets after the February US Personal Consumption Expenditures Index (PCE) came in line with market expectations. Many investors still hope the Fed will start to cut interest rates in June, ” Huang said, referring to the CME FedWatch Tool, which showed equity traders saw a 60.5 percent probability the Fed will cut rates by at least a quarter point in June.

The February PCE, one of the inflation indicators the Fed favors to assess for possible adjustments of its monetary policy, rose 2.5 percent from a year earlier and grew 0.3 percent from a month earlier.

“The earlier gains on the Taiex gave investors a chance to lock in their profits with selling focusing on tech heavyweights, in particular TSMC,” Huang said.

Teck stocks

TSMC, the most heavily weighted stock on the local market, lost 1.16 percent to close at NT$779.00. TSMC’s losses contributed about 72 points to the Taiex’s decline and sent the electronics index and electronics sub-index lower by 0.76 percent and 1.14 percent, respectively.

Among other semiconductor stocks, IC packaging and testing services provider ASE Technology Holding Co. tumbled 6.83 percent to end at NT$150.00, smartphone IC designer MediaTek Inc. shed 2.93 percent to close at NT$1,160.00, and United Microelectronics Corp., a smaller contract chipmaker, ended down 0.96 percent at NT$51.70.

Outperforming its counterparts, Alchip Technologies, Ltd. an application-specific integrated circuit (ASIC) designer, rose 2.40 percent to end at NT$3,420.00 and maintained its position as the most expensive stock in Taiwan.

Also in tech stocks, iPhone assembler Hon Hai Precision Industry Co. bucked the downturn, rising 0.33 percent to close at NT$150.50 amid optimism about its efforts at developing AI servers.

However, other AI related stocks appeared mixed with AI server supplier Quanta Computer Inc. losing 3.75 percent to end at NT$282.00, and rival Inventec Corp. falling 1.51 percent to close at NT$58.80. Meanwhile, LITE-ON Technology Corp., a maker of power management solutions for AI server use, lost 0.99 percent to close at NT$100.00, while Giga-Byte Technology Co., a leading graphics card vendor for AI applications, rose 0.79 percent to ends at NT$318.50.

Non-tech stocks

“Non-tech stocks rode the wave of bargain hunting throughout the session, and buying became more apparent as the tech sector headed south,” Huang said. “Many old economy stocks had been lagging far behind their tech counterparts.”

The petrochemical index rose 2.31 percent on the back of a rebound in international oil prices, dealers said.

Formosa Petrochemical Corp. rose 3.31 percent to close at NT$71.80, Formosa Plastics Corp. gained 2.90 percent to end at NT$70.90, Nan Ya Plastics Corp. grew 2.68 percent to close at NT$57.50, and Formosa Chemicals & Fiber Corp. ended up 1.63 percent at NT$56.10.

Elsewhere in the old economy sector, the construction index rose 1.72 percent with Hung Ching Development & Construction Co. surging 8.16 percent to close at NT$43.75 and Cathay Real Estate Development Co. gaining 2.56 percent to end at NT$22.00.

In the financial sector, which fell 0.46 percent in line with the broader market, Fubon Financial Holding Co. fell 0.29 percent to close at NT$69.50 but Cathay Financial Holding Co. rose 0.62 percent to end at NT$48.95.

“I expect the Taiex will continue to consolidate for some time,” Huang said. “Local investors had better pocket their gains as the main board stages a rebound to keep as much cash as possible on hand for the moment, like foreign institutional investors have done in recent sessions.”

According to the TWSE, foreign institutional investors sold a net NT$2.62 billion worth of shares on the main board Monday.

(By Frances Huang)

Enditem/AW

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