A global correction in technology stocks finally hit Taiwan's share market yesterday, ending what had been a nine-day, nearly 15 percent rally, though the closing slide was modest and not all technologies were bloodied.
Brokers said investors continued to shift funds to relatively underweighted traditional sectors, but a sell-off in the heavily weighted tech sector finally dragged the broad index into the red.
Stocks also fell after local media reported the Securities and Futures Commission (證期會) is looking into possible insider trading related to United Microelectronics Corp's (聯電) plan to merge with Worldwide Semiconductor Manufacturing Corp.
The TAIEX closed at 8,845.47, down 76.56 points or 0.86 percent from Thursday's 8,845.47 finish. Before yesterday, bullish investors had pushed the index 14.63 percent higher over a nine-day rallying dating to Dec. 21.
Turnover was again very heavy at NT$222.09 billion, but below Thursday's NT$267.61 billion.
Brokers said foreign institutions' decision to take profits in a market where they had invested a net US$10.8 billion in 1999 was more troubling to local investors than the high-tech sell-off, noting that Taiwan technologies had not risen so strongly in recent months as those in other markets.
"Despite strong faith in Taiwan's fundamentals, foreign funds are viewed as the key benchmark," said Leonard Hsueh, head of research at SinoPac Securities.
"Two straight days of foreign net selling really has shaken confidence."
Foreign funds have continued to be active in 2000 but showed signs of cashing out on Wednesday and Thursday, when they sold a net NT$3 billion (US$97 million).
Although Taiwan had seen stock values realign since Tuesday, it had managed to do so with a rising index, while yesterday, the flight to traditional sectors from technologies began to resemble that seen in other markets, with a broad index fall.
"It looks very much like the United States today," said Jardine Fleming's vice president George Hou. "People are moving out of software and Internet-related stocks, while cyclical shares are relative strong."
The electronics sector, which dominates the TAIEX weightings, fell for a second day with a 1.69 percent loss.
Microchip titan TSMC (台積電) shed NT$5 to NT$173. After the close of trade, the company said it posted another record high monthly sales of NT$8.621 billion for December.
Yet Taiwan's memory-chip sector defied the downdraft.
Mosel (茂矽), which makes dynamic random-access memory chips, was the most actively traded issue and rose NT$3 to NT$57. DRAM-maker Winbond Electronic Corp (華邦電子) gained NT$1.5 to NT$81.
Transportation shares rose as some investors bet their earnings can improve as crude oil prices are now 8.7 percent below a nine-year high of US$27.15 reached in late November on New York Mercantile Exchange. Evergreen Marine Corp (長榮) rose NT$1.9, or 6.9 percent, to NT$29.3. EVA Airways Corp rose NT$1 or 6.8 percent, to NT$29.3. China Airlines Co (華航) rose NT$0.3, or 1.4 percent, to NT$21.7.
President Chain Store Co (統一超), which operates the island's 7-Eleven franchise and will offer Internet-related delivery services in its stores, fell NT$11, or 6.8 percent, to NT$152 as some investors reduced shares on concern its 75 percent surge since Dec. 1 isn't warranted by its profit outlook.
On Thursday, foreign investors sold 1.5 million President Chain shares. Brokers said better-than-expected trade data, released at mid-morning, was not a key factor as investors had long factored in the strong growth in trade in 1999.
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