Sun, May 12, 2019 - Page 14 News List

TAIEX slides amid US-China tensions

WINDOW OF OPPORTUNITY:US officials have allowed for goods in transit to be exempt from tariff increases, leaving the possibility of an agreement being signed

Staff writer, with CNA and AFP

Local shares on Friday closed slightly lower after the market reacted to the US’ increase of punitive tariffs on US$200 billion of imported Chinese goods that took effect at noon in Taipei, dealers said.

The bellwether electronics sector led the downturn, but some investors parked their funds in select old economy and financial stocks to lend some support to the broader market, they said.

The TAIEX on Friday ended down 20.68 points, or 0.19 percent, at 10,712.99, after moving between 10,669.39 and 10,834.69. Turnover was NT$124.49 billion (US$4.02 billion).

That was a drop of 3.5 percent from a close of 11,096.30 on May 3.

The market opened up 0.17 percent and rose to the day’s high at about 10am on a technical rebound from a session earlier, when the weighted index ended down 1.74 percent because of ongoing trade friction between the US and China, dealers said.

However, with the TAIEX surpassing 10,800 points and the increase in punitive tariffs on imported Chinese goods from 10 percent to 25 percent taking effect, selling set in to pull the market into negative territory before some late buying limited the losses, they said.

“The earlier gains were simply technical in nature from the plunge a session earlier,” Hua Nan Securities Co (華南永昌證券) analyst Kevin Su (蘇俊宏) said.

“Concerns over the global trade issue still dictated market sentiment, in particular the implementation of the 25 percent tariffs,” he said.

The US announced that it would carry out the tariff increase against China, effective from 12:01am on Friday, after the first day of the latest round of trade talks in Washington on Thursday did not yield satisfactory results.

“We have to pay close attention to how the ongoing trade talks will proceed after the negotiations resume Friday,” Su said.

“The market is also worried about potential new 25 percent tariffs on an additional US$325 billion of Chinese goods as US President Donald Trump threatened on Sunday [last week],” he said.

The electronics sector continued to dominate the movement of the broader market throughout the session on Friday, Su said.

The subindex for the sector closed down 0.37 percent at 439.41, off a high of 445.33.

Among the falling large-cap tech stocks, contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the most heavily weighted stock on the local market, fell 0.19 percent to close at NT$256, with 18.6 million shares changing hands, after hitting a high of NT$259.

Hon Hai Precision Industry Co (鴻海精密), an assembler of Apple Inc’s iPhones that is second to TSMC in terms of market cap, lost 0.71 percent to end at NT$83.70, off a high of NT$85.60, while Largan Precision Co (大立光), a supplier of smartphone camera lenses to Apple, rose 1.02 percent to close at NT$4,455 amid optimism over its sales this month.

Among the gaining old economy stocks, food conglomerate Uni-President Enterprises Corp (統一企業) rose 1.05 percent to close at NT$77.30, Formosa Chemicals & Fibre Corp (台灣化纖) added 0.94 percent to end at NT$107 and Formosa Plastics Corp (台灣塑膠) gained 0.92 percent to close at NT$109.50.

In the financial sector, which closed up 0.05 percent, CTBC Bank (中信銀行) rose 1.68 percent to end at NT$21.20 and Shanghai Commercial & Savings Bank (上海商業儲蓄銀行) added 0.80 percent to close at NT$50.70, while Cathay Financial Holding Co (國泰金控) fell 0.69 percent to end at NT$43.20.

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