Shares ended lower yesterday, as investors switched out of technology stocks into traditional sectors of the economy following the revaluation of China's currency.
The TAIEX fell 13.30 points, or 0.2 percent, to 6,380.73, on turnover of NT$97.95 billion (US$3.07 billion). For the week ending yesterday, the index shed 29.86 points or 0.47 percent, following a 3.37 percent gain in the previous week.
"The Chinese yuan's revaluation benefited Taiwan's companies that manufacture domestically for the local market on expectations of an appreciation in the local currency," said Andrew Teng (
An appreciation in the New Taiwan dollar would boost local consumption, Teng said.
But the bellwether electronics sector was particularly badly hit by worries that exports could become less competitive overseas as a result of the Chinese move, dealers said.
"Big technology shares dropped as money switched to traditional industry stocks," said President Securities Corp (
The electronics sector was down 1.30 percent.
Victim
Hon Hai Precision Industry Co (
Hon Hai was down 3.31 percent at NT$175.50.
More consolidation seems inevitable in the near term, before the market can regain momentum and move upward, he said.
"One key consideration will be fund flows into and out of the region," he said.
Hot money
"It is now the market consensus that a further yuan appreciation will be all but imminent, and this in turn may prompt a good portion of `hot money' to seek more promising investments elsewhere in the near term," he said.
Shares of thin-film-transistor liquid-crystal-display makers fell, unable to remain unscathed from the sell-off in electronics stocks despite an earlier boost from LG.Philips LCD's lower-than-expected pricing discount for its latest American depositary receipts offer.
AU Optronics Corp (
"Companies with a large exposure to the Chinese market are also expected to gain as the revaluation may strengthen consumer spending in China," said Fubon Securities Co (
The local bourse is expected to look for guidance from several heavyweight companies such as Taiwan Semiconductor Manufacturing Co (TSMC,
TSMC was up 0.89 percent at NT$56.90, while rival United Microelectronic Corp (
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