Local shares closed lower yesterday, with the triple-digit gains on Wall Street overnight not managing to stimulate a market cooled by concern over the weakness of the Chinese yuan, dealers said.
However, certain market heavyweights, in particular Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), bucked the downward trend, lending some support to the broader market, dealers said.
Trading volume remained thin in a quiet session, since many foreign institutional investors were still on their Christmas holidays, they added.
The weighted index on the Taiwan Stock Exchange closed down 13.92 points, or 0.17 percent, at 8,279.99, after moving between 8,262.52 and 8,342.34, on turnover of NT$53.25 billion (US$1.61 billion).
The market opened up 0.23 percent in what turned out to be the day’s high in a knee-jerk reaction to a 192.71 point, or 1.1 percent, increase on the Dow Jones Industrial Average overnight. However, with the index moving closer to the nearest technical resistance level ahead of 8,400 points, selling began to drag the market into negative territory and the weakness continued to the end of the session, the dealers said.
“Taiwan was not the only market in the region to ignore the strong showing on Wall Street overnight, as many investors were worried about the continued weakness of the yuan,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang (黃國偉) said, referring to losses in the Hong Kong and Shanghai markets.
“The falling yuan prompted fears that funds are retreating from the region — the last thing local equity markets want to see,” Huang said.
The yuan yesterday fell to a five-year low against the US dollar in the offshore market at one point.
Fortunately, the market did not suffer intolerable downward pressure as TSMC, the most heavily weighted stock in the local market, remained resilient, stabilizing the broader market, Huang said.
TSMC rose 0.4 percent to close at NT$142.50, while the electronics sub-index ended down 0.18 percent and the semiconductor sub-index ended down 0.03 percent.
“It is possible that government-led funds picked up stocks, such as TSMC, in a bid to prevent the index from falling sharply at a time when the broader market came close to the technical barrier of 8,400 points,” Huang said.
Among other high-tech stocks, Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics maker, gained 0.2 percent to close at NT$80.9, while IC packaging and testing services provider Advanced Semiconductor Engineering Inc (ASE, 日月光) lost 2 percent to end at NT$37.15.
In the old economy sector, Formosa Plastics Corp (FPC, 台灣塑膠) rose 0.8 percent to close at NT$73.50, while Taiwan Cement Corp (台泥) fell 1.6 percent to end at NT$27.20.
The property sector closed up 2.35 percent after the government relaxed the rules governing mortgages.
“With many foreign investors away, we had another boring session and this is expected to continue tomorrow, with the index likely to move into consolidation mode,” Huang said.
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