Shares in Taiwan closed moderately higher yesterday, with most earlier gains eroded as investors became cautious about political uncertainty over today’s presidential and legislative elections.
In addition, investors appeared reluctant to chase prices and maintain the earlier significant upturn as they witnessed the Chinese equity market taking a beating amid concerns over a slowdown of the Chinese economy and weakness of the yuan.
The TAIEX closed up 19.13 points, or 0.25 percent, at 7,762.01, off an early high of 7,842.34, on turnover of NT$89.99 billion (US$2.66 billion).
Ta Ching Securities Co (大慶證券) analyst Andy Hsu (許博傑) said that it was no surprise that investors locked in the gains they had built earlier in the session, as they remained haunted by political uncertainty due to today’s elections, until buying late in the session helped assuage non-economic impacts.
“Buying in large-cap stocks, such as United Microelectronics Corp (UMC, 聯電) and Formosa Plastics Corp (台塑), became more apparent after 1:20pm,” Hsu said. “I guess that the buying largely came from government-led funds and even the National Financial Stabilization Fund, in a bid to prevent the index from ending below the closing level of the previous session before the elections.”
UMC shares rose 0.90 percent to close at NT$11.25 and Formosa Plastics gained 0.40 percent to close at NT$75.5.
Taiwan Semiconductor Manufacturing Co (台積電) shares gained 4.18 percent, their biggest single-day gain since Sept. 9 last year, to close at NT$137, while Largan Precision Co (大立光), a smartphone camera lens supplier to Apple Inc, added 8.89 percent to close at NT$2,020. It was the first time Largan shares had returned to above the NT$2,000 mark since Tuesday last week.
The financial sector underperformed the broader market, with selling emerging amid concerns that a weaker Chinese yuan would cause heavy losses at local banks.
Fubon Financial Holding Co (富邦金控) shares fell 3.16 percent to close at NT$36.8, CTBC Financial Holding Co (中信金控) shed 3.19 percent to close at NT$15.15 and Cathay Financial Holding Co (國泰金控) lost 4.05 percent to NT$35.5.
Today’s election comes at a critical time for the Taiwanese stock market, which has fallen more than 7 percent this year as foreigners have pulled US$1.5 billion from local equities, the most of any Asian market tracked by Bloomberg.
The possibility of a rush of fund redemptions amid the political uncertainty is prompting top-performing Taiwanese fund manager Vincent Yang (楊金峰) to cut his holdings in the Franklin Templeton SinoAm Conventional Industry Fund to about 84 percent of his portfolio, lower than the long-term average of about 88 percent, he said in an interview.
Democratic Progressive Party (DPP) presidential candidate Tsai Ing-wen (蔡英文) is making her second attempt to become Taiwan’s first female president as she runs against Chinese Nationalist Party (KMT) candidate Eric Chu (朱立倫) and People First Party candidate James Soong (宋楚瑜) amid dissatisfaction over slow growth and stagnant wages.
While the DPP’s charter officially supports independence from China, Tsai has pledged to maintain the “status quo.”
“If the DPP gets elected, it won’t lead to a complete halt in cross-strait interaction, though it may be different in terms of how much the both sides are linked and how soon we are opened up,” said Yang, whose fund has beaten 98 percent of its peers in the past year, according to data compiled by Bloomberg.
Tsai has promised a government focused on reining in property costs and expanding the biotechnology industry.
For that reason, Yang is adding biotech stocks to his portfolio.
The outlook for electronics companies is less favorable amid concerns about slowing demand for Apple Inc’s products, he said.
Blackfriars Asset Management Ltd’s Tony Hann expects the DPP to prevail in the elections and says an equity-market recovery would depend on how the new leadership manages its relations with China and whether there is a recovery in demand for technology products.
He is neutral on Taiwanese equities.
Ronald Chan, the Hong Kong-based chief investment officer of Asia ex-Japan equities at Manulife Asset Management Ltd (宏利資產管理), says the outlook for the Chinese economy and the yuan is the most important factor affecting stocks in Taiwan.
“No matter who wins, the fact that China is slowing down is what Taiwan will go through,” said Chan, who turned neutral on Taiwan’s stock market after being overweight last year. “It’s more to do with the current situation in China, where there are a number of issues such as policy uncertainty, the economic slowdown and the yuan’s depreciation.”
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
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