Wall Street losses, oil price hikes weight down TAIEX

Shares ended down yesterday following losses on Wall Street overnight and rises in oil prices, while the local currency trimmed gains from its strongest level in almost five years on speculation the central bank sold its currency to slow an appreciation that may erode exporter profits.

The TAIEX finished 20.75 points, or 0.3 percent, lower at 6,192.53. Decliners outnumbered advancers 597 to 315, while 96 issues ended the day unchanged.

The New Taiwan dollar yesterday strengthened NT$0.029 to close at NT$30.79 against its US counterpart, according to Taipei Forex Inc. The turnover was US$1.3 billion, compared with a daily average of US$1 billion this month through yesterday.

On the local bourse, the technology subindex lost 0.2 percent, while finance dropped 0.6 percent, steel shed 1 percent and transportation fell 1.4 percent.

Contract chipmaker Taiwan Semiconductor Manufacturing Co (台積電) fell 1.9 percent to NT$52, while rival United Microelectronics Corp (聯電) ended 1 percent lower at NT$19.95.

Dealers said overseas investors were paring back holdings in the two chipmakers and other blue-chip companies because of turbulence in the stock market caused by Taiwan-China tensions.

Shares of EVA Airways Corp (長榮) dropped 2.9 percent to NT$15, while rival China Airlines (華航) lost 2.2 percent to NT$17.75 on concerns that prospects for cross-strait cargo flights will be hurt.

Dealers said they suspected that the central bank may have bought the US currency after the South Korean won pared its advance on speculation that the country's central bank sold it. Governor Park Seung said yesterday that the Bank of Korea won't ignore the appreciation in the won, which had soared to its highest level since 1997. Taiwan competes with Korea for electronics exports.

"The price action may suggest the central bank sold the Taiwan dollar," said Gary Huang, a foreign-exchange trader in Taipei at Union Bank of Taiwan (聯邦銀行).

"The central bank may not want its currency to strengthen more than South Korea's won," he said.