TAIEX closes lower as tech heavyweights suffer

Shares ended slightly lower yesterday, as declines in technology heavyweights more than offset gains in some old-economy blue chips.

The TAIEX closed down 8.76 points, or 0.1 percent, at 6,193.62.

Decliners outnumbered advancers 468 to 387 with 146 stocks unchanged.

"The main bourse mostly teetered around the break-even point throughout the session, sandwiched between weak tech heavyweights and a few rising non-tech shares," said Jeffrey Cheng, an analyst at Yuanta Core Pacific Capital Management (元大京華投顧).

The technology subindex fell 0.3 percent, with chip stocks leading the decline after the Philadelphia Semiconductor Index dropped 1.3 percent overnight in the US.

Shares in Taiwan Semiconductor Manufacturing Co (台積電) fell 1.9 percent to NT$52.50, while United Microelectronics Corp (聯電) closed 2.0 percent lower at NT$20.05.

Concern that flat-panel makers will post losses through next year also weighed down share prices.

Leading panel maker AU Optronics Corp (友達光電) ended down 1.8 percent at NT$45.80 and Chi Mei Optoelectronics Corp (奇美電子) closed flat at NT$45.30.

Analysts said the pullback in tech heavyweights implied foreign investors had slowed their buying of local shares.

"But it's still too early to say overseas investors have started withdrawing their money from the Taiwan market," Cheng said. "One thing's for sure though, the buying streak is on the wane."

Dealers said other factors also hindered market participation, including concerns about China passing an "anti-secession law" at its annual legislature, which starts this weekend.

Until that issue is resolved, the market is likely to see rotational plays amid concerns over the appreciation of the NT dollar and its possible impact on exports, an analyst said.

"Political factors and anticipation of further rises in the Taiwan dollar -- which dampened market sentiment this week -- might linger, but smaller caps will still attract buyers," said Daniel Tseng (曾建詮), a manager at Fubon Securities Investment Services Co (富邦投顧).

The export-oriented electronics industry could suffer given the appreciation of the local currency but the loss could be offset by the gradual recovery of the global economy in the next few months, Tseng said.

But Cheng said that investors were more interested in chasing companies that have announced high dividend yields.

On the local bourse, handset stocks were among the tech sector's best performers on expectations multinational cellphone companies will accelerate subcontracting manufacturing to Taiwanese suppliers, analysts said.

Shares in Arima Communication Corp (華冠通訊), which counts Sony Ericsson as its largest client, jumped 6.9 percent to NT$26.30 and Compal Communications Inc (華寶通訊) rose 2.7 percent to NT$80.90.

Petrochemical stocks gained 0.6 percent overall.

Formosa Plastics Corp (台塑) was up 1.0 percent at NT$59.50. The blue-chip company said on Thursday its audited net profit for last year more than doubled, and it approved a NT$3.60 cash dividend.