Shares in Taiwan on Friday continued a downturn from the previous session to end lower as the bellwether electronics sector fell, led by large-cap stocks, and local investors shrugged off gains posted by the tech-heavy NASDAQ in the US market overnight, dealers said.
Sentiment remained cautious during the ongoing earnings season on Wall Street, with many investors preferring to stay on the sidelines before gathering more information about earnings in the global technology business in the second quarter and industrial outlook for the third quarter, they said.
The TAIEX closed down 62.66 points, or 0.6 percent, at 10,436.70 points, after moving between 10,428.47 and 10,477.72, on turnover of NT$84.21 billion (US$2.77 billion). That compared with a close of 10,443.91 points on July 14, a weekly decline of 0.15 percent.
The market opened down 0.29 percent, although tech stocks listed in the US market moved higher for the 10th consecutive session.
Selling on the local main board escalated with electronics heavyweights, in particular smartphone camera lens supplier Largan Precision Co (大立光) suffering steep losses and pushing the weighted index lower by the end of the session, dealers said.
However, buying shifted to the local over-the-counter market, where smaller-cap stocks are traded, as investors dumped large-cap stocks on the main board amid fears of a further pullback in the weighted index, they said.
The TPEX on Friday ended up 0.33 percent at 138.61 points, a weekly increase of 1.4 percent from a close of 136.64 a week earlier.
“After consolidating in recent sessions, with the failure of the main board to overcome stiff technical resistance ahead of the 10,545-point mark, many investors seem to have lost patience and preferred to pocket their money for the moment,” KGI Securities Co (凱基證券) analyst Phil Chu (朱有志) said.
The 10,545-point level was the intraday high on June 27 for the main board, which has since failed to breach the mark, creating downward pressure.
“Today’s selling focused on select large-cap high-tech stocks, which accelerated the fall on the broader market, as I think foreign institutional investors stood on the sell side,” Chu said.
Foreign institutional investors who own a large chunk of Taiwanese high-tech stocks on Friday sold a net NT$4.81 billion of shares on the main board, Taiwan Stock Exchange data showed.
Among the falling electronics stocks, Largan, the most expensive stock on the local market, fell 2.78 percent to close at NT$5,425.
Selling of Largan shares came as investors took advantage of the stock’s recent upturn to lock in their gains, Chu said.
Also in the electronics sector, Taiwan Semiconductor Manufacturing Co (台積電), the most heavily weighted stock on the local market and the largest contract chipmaker in the world, fell 0.7 percent to end at NT$214.00.
Shares in Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics maker, shed 1.29 percent to close at NT$115.00.
Non-tech stocks generally moved lower, increasing pressure on the broader market, dealers said.
In the non-tech sector, shares in China Steel Corp (中鋼), the nation’s largest steelmaker, shed 1.55 percent to close at NT$25.40 and Eclat Textile Co (儒鴻) lost 0.4 percent to end at NT$370.50.
Fubon Financial Holding Co (富邦金控) closed down 0.74 percent at NT$47.15.
“Today’s moderate turnover was evidence of caution embraced by many investors who are waiting for the release of earnings by tech firms listed in the US market, such as Apple Inc, which could move the local electronics sector,” Chu said.
Elsewhere in Asia, equities extended a rise into its 10th day, but some investors took some profit off the table amid an investigation into the US president that might stall his economic agenda.
The US Federal Reserve’s meeting on Wednesday next week also kept some investors on the sidelines ahead of the weekend after the European Central Bank deferred the decision on policy normalization until later this year.
The MSCI Asia Pacific Index on Friday rose 0.07 percent to 159.52 in Hong Kong, an increase of 1.3 percent from 157.43 on July 14.
A special counsel investigating possible ties between the US President Donald Trump’s campaign and Russia in last year’s US presidential election is said to be examining a broad range of transactions involving Trump’s businesses, as well as those of his associates.
Asia’s equity benchmark rose 4.4 percent in the nine sessions through Thursday, with markets in Japan and Hong Kong near two-year highs.
Japan’s Nikkei 225 on Friday slipped 0.2 percent to close at 20,099.75, a decline of 0.1 percent from 20,118.86 a week earlier, while South Korea’s KOSPI rose 0.3 percent to 2,450.06, gaining 1.4 percent from 2,414.63 on July 14.
There was a “bit of profit-taking” amid weak cues from global markets before the Fed’s rate decision next week, said Shane Oliver, Sydney-based global strategist at AMP Capital Investors Ltd, which manages about US$120 billion.
“The US is overvalued, while [the] rest of the world isn’t, so Asian stocks have more to gain, especially as the Chinese economy is looking stronger and monetary policies in the region are relatively supportive,” Oliver said.
Additional reporting by AP
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