Local shares on Friday closed lower as investors took cues from overnight weakness on Wall Street to cut their holdings in local equities, while bargain hunters turned active in the latter part of the session to cap the downturn by the end of the session, dealers said.
Selling on the local equity market was seen almost across the board, with the focus on the bellwether electronics sector, in particular large-cap stocks, as sentiment was hit by losses incurred by high-tech stocks in US markets, the dealers said.
The TAIEX on Friday closed down 48.04 points, or 0.46 percent, at 10,321.33, after moving between 10,259.83 and 10,330.39, on turnover of NT$88.088 billion (US$2.9 billion). That represented a decrease of nearly 0.1 percent from a close of 10,329.57 on Aug. 11.
The market on Friday opened down 0.43 percent in a knee-jerk reaction to falling Wall Street, where the Dow Jones Industrial Average closed down 1.24 percent and the tech-heavy NASDAQ shed 1.94 percent overnight amid rising concerns that US President Donald Trump will not get sufficient support from the US Congress to push for business-friendly bills such as tax reforms, the dealers said.
US lawmakers and the business community might not want to work with Trump after he dismantled two CEO advisory forums to the White House following his controversial remarks following violent protests in Charlottesville, Virginia.
Downward pressure on the local equity market escalated to plunge the weighted index 100 points at one point, led by the heavy losses suffered by large-cap stocks in the electronics sector.
However, with the index falling below the 10,300-point mark, some bargain hunting emerged to help the broader market recoup some of the earlier losses by the end of the session, the dealers said.
“Wall Street dictated the local equity market today again,” KGI Securities (凱基證券) analyst Phil Chu said. “It was no surprise that stocks in Taiwan faced selling soon after the local market opened, but the silver lining was that some bargain hunters remained willing to buy at lows.”
Judging from the moderate turnover, the downward pressure was not intolerable at all and it was easy for the weighted index to come off the early low, Chu said.
“I think the main board still had some technical support at about 10,250, even though the index fell below 10,300 points during the session,” he added.
The late-session buying helped the main board recover its earlier losses and trade above an intraday low of 10,225 seen four days earlier, indicating that the market has not become much technically weaker, Chu said.
High-tech heavyweights came under relatively steep downward pressure throughout the session as investors tended to unload these stocks, which were very liquid, in exchange for cash, he added.
Among the falling electronics giants, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the most heavily weighted stock on the local market, fell 0.71 percent to close at NT$212.50, off an early low of NT$211 due to bargain hunting, with 13.71 million shares changing hands.
Also helped by the late-session trading, Hon Hai Precision Industry Co (鴻海精密), an assembler of Apple Inc’s iPhones and iPads, fell 0.43 percent to close at NT$115.50 after hitting NT$114, while Largan Precision Co (大立光), a smartphone camera lens supplier to Apple, appeared resilient against the broader market, closing up 0.18 percent at NT$5,530, off an early low of NT$5,480.
PC maker Asustek Computer Inc (華碩), which has entered the smartphone business, also outperformed the weighted index, gaining 0.82 percent to end at NT$245.50 amid hopes that the launch of its latest flagship ZenFone series will boost shipments.
In the non-high-tech sector, Formosa Chemicals and Fibre Corp (台灣化學纖維) fell 0.43 percent to close at NT$91.80, and textile maker Far Eastern New Century Corp (遠東新世紀) lost 0.21 percent to end at NT$24.20.
Fubon Financial Holding Co (富邦金控) fell 0.63 percent to close at NT$47.60.
“After repeatedly hitting record highs in recent sessions, Wall Street’s valuation has been high, despite yesterday’s plunge. Investors should pay attention to possible volatility in the US market, which will continue to affect local shares,” Chu said.
Foreign institutional investors on Friday sold a net NT$4.80 billion of shares on the main board, Taiwan Stock Exchange data showed.
Equities fell elsewhere in Asia, paring the week’s gains, after a terror attack in Barcelona, Spain, added to the Trump concerns.
The MSCI Asia Pacific Index on Friday lost 0.35 percent to close at 159.27 in Hong Kong, the largest decline this week. However, that was an increase of 0.5 percent from a close of 158.45 on Aug. 11.
About three shares retreated for each one that gained on Friday, with financial and technology sub-gauges leading the drop.
Indices slid across the region, with Japan’s TOPIX marking its worst weekly performance since June as the yen strengthened, while Singapore’s benchmark was poised for its longest stretch of weekly losses in more than a year.
The TOPIX on Friday closed down 1.08 percent at 1,597.36, dropping 1.02 percent from a close of 1,617.25 on Aug. 10.
Action planned to improve trade, tax, infrastructure and jobs, which was at the top of Trump’s campaign agenda, has started sounding like “empty promises,” CMC Markets strategist Margaret Yang (楊燕) said.
India’s Infosys Ltd was the top contributor to the decline in MSCI’s broadest gauge of stocks in the Asia-Pacific region after Vishal Sikka resigned as CEO of Asia’s second-largest software services provider.
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