The TAIEX shed 0.37 percent to close at 9,111.46 yesterday — the first trading day after the Lunar New Year holiday — weighed by weakness in electronics and transportation shares amid a rising local currency and higher energy costs.
Turnover expanded to NT$161.37 billion (US$5.53 billion) from NT$143.05 billion on Jan. 28, Taiwan Stock Exchange data showed, as investors trimmed holdings in electronics stocks and increased their stake in raw materials shares.
The weighted index opened high and climbed to 9,229.69 before heading south mid-session and dropping to an intraday low of 9,085.41.
“The local bourse took a break today to reflect lackluster financial reports by some major technology firms,” Alan Tseng (曾炎裕), an analyst at Capital Securities Corp (群益證券), said by telephone.
MediaTek Inc (聯發科), the nation’s largest handset chip designer, ended limit down, sliding 6.94 percent to NT$369.50 following the company’s announcement on Jan. 31 that fourth-quarter net income dropped 45.1 percent -quarter-on-quarter and 56.2 percent year-on-year because of sagging demand, falling prices and a stronger New Taiwan dollar.
Advanced Semiconductor Engineering Inc (日月光半導體), the world’s top chip-packaging and testing firm, fell 2.46 percent to NT$35.70 after net profit shrank 9.12 percent in the fourth quarter.
Tseng expected technology plays to remain weak this quarter because of seasonal effect, but added that the TAIEX could stage a modest comeback in the short term and rally above the 10,000-point mark toward the end of the year.
“Global demand for electronics could pick up in the second half, as the government introduces measures to boost investor confidence ahead of legislative and presidential elections,” Tseng said.
The electronics and semiconductor sub-indexes dipped 1.46 percent and 1.83 percent respectively, while transportation shares dropped 2.54 percent, stock exchange data showed.
Richie Su (蘇雙富), a fund manager at Taishin Investment Trust Co (台新投信), said that rising crude oil prices prompted investors to cut holdings in shipping and airline stocks.
China Airlines Ltd (華航) dropped 4.93 percent to NT$21.20, while EVA Airways Corp (長榮航空) saw its shares fall 5.49 percent to NT$31.85.
However, the NT dollar’s continued advance, while dampening exporters’ profitability, is likely to benefit the stock market as the trend may draw more hot money into Taiwan, Su said.
Net buying by foreign investors reached NT$1.85 billion yesterday, while the NT dollar rose to a fresh 13-year high at NT$29.12 against the greenback, Taipei Forex Inc data showed.
The NT dollar breached the NT$29 mark and hit NT$28.90 in midday trade.
“More funds will flow to Asia to take advantage of its fast--growing economy,” Su said. “The political unrest in Egypt will accelerate the trend.”
A currency trader at Union Bank of Taiwan (聯邦銀行) agreed that the NT dollar was under further pressure to appreciate.
“The NT dollar may close at NT$28.8 later this month given the slow, but steady pace of gain as well as a weak greenback,” the trader said on condition of anonymity.
The trader expected the central bank to keep its defense of the local currency at the NT$28.5 level to help support exporters.