Local shares on Friday moved lower as lingering concerns over trade friction between the US and China offset gains posted by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), dealers said.
Although Washington and Beijing are to resume high-level negotiations in the US on Oct. 10, local investors took a wait-and-see attitude and reduced their stock holdings in favor of cash, they said.
The TAIEX on Friday ended down 42.31 points, or 0.39 percent, at 10,829.68, after moving between 10,827.61 and 10,921.17, on turnover of NT$121.61 billion (US$3.92 billion). That was a drop of 0.9 percent from a close of 10,929.69 on Sept. 20.
The market opened up 0.29 percent to surpass 10,900 points on a technical rebound from a session earlier, when the weighted index edged lower, and moved to the day’s high early in the morning, dealers said.
However, a 0.3 percent fall in the Dow Jones Industrial Average overnight eventually took its toll and selling pressure appeared across the board.
“There has been stiff technical resistance ahead of 10,900 points, so investors simply seized the continued fears over global trade as an excuse to lock in profits,” Hua Nan Securities Investment Management Co (華南投顧) chairman David Chu (儲祥生) said.
“It was no surprise that the TAIEX remained in consolidation mode, as few investors believe Washington and Beijing will reach any deal in the upcoming talks,” Chu said. “The trade dispute is expected to continue to affect US and even global markets, including Taiwan.”
The silver lining on Friday was that TSMC, the most heavily weighted stock on the local market, moved higher after IC Insights forecast that its second-half sales would be 32 percent higher than in the first half of this year on strong demand for its advanced technology chips, dealers said.
TSMC rose 1.49 percent to close at NT$272 after hitting an early high of NT$272.50, with 41.17 million shares changing hands.
The gains pushed TSMC’s market capitalization to a new high of NT$7.05 trillion at the close, up from NT$6.94 trillion a day earlier.
“Without TSMC’s upturn, the TAIEX would have fallen another 40 points or so. The stock served to stabilize the broader market today,” Chu said.
Also in the bellwether electronics sector, iPhone assembler Hon Hai Precision Industry Co (鴻海精密) lost 1.08 percent to close at NT$73.20 and IC designer MediaTek Inc (聯發科) fell 1.86 percent to end at NT$369.
Largan Precision Co (大立光), a supplier of smartphone camera lenses to Apple Inc, rose 1.14 percent to close at NT$4,450.
DRAM chipmakers faced pressure after US-based counterpart Micron Technology Inc reported a decline in earnings for the third quarter and predicted a disappointing fourth quarter, Chu said.
Among the falling DRAM stocks, Nanya Technology Corp (南亞科技) shed 4.51 percent to close at NT$80.50 and rival Winbond Electronics Inc (華邦電子) lost 1.65 percent to end at NT$17.85.
Investors who were concerned about the global trade dispute also cut their holdings in old economy and financial shares, Chu said.
Among the falling old economy stocks, Formosa Plastics Corp (台灣塑膠) shed 1.77 percent to close at NT$94.50 and Formosa Chemicals & Fibre Corp (台灣化纖) lost 1.25 percent to end at NT$86.70 due to a weakening oil market hurt by concerns over global demand amid the trade dispute.
In the financial sector, which closed down 0.57 percent, Yuanta Financial Holding Co (元大金控) dropped 1.07 percent to end at NT$18.50 and SinoPac Financial Holding Co (永豐金) fell 1.63 percent to close at NT$12.10.
“Investors are wondering when foreign institutional investors will resume buying,” Chu said. “Due to possible further volatility in the US from the current trade frictions, I expect foreign institutional investors will remain cautious.”
Foreign institutional investors on Friday sold a net NT$2.24 billion of shares on the main board, Taiwan Stock Exchange data showed, the third straight session in which they were net sellers.
Elsewhere in Asia on Friday, markets fell following declines on Wall Street as an impeachment inquiry into US President Donald Trump weighed on sentiment.
Political turmoil in Washington following the release of a whistle-blower’s complaint overshadowed positive comments from Trump on US-China trade talks and steps toward a new agreement with Japan.
The incendiary complaint alleges that Trump sought to enlist Ukraine to help his re-election campaign and then conspired with staff to cover it up.
“The market isn’t clear on what to make of the latest impeachment developments in the US, and this continues to increase uncertainly and could be weighing on investor sentiment,” AxiTrader Asia-Pacific market strategist Stephen Innes said in a note.
“Compounding this uncertainty is the stark reality that most of the global economy is moving in reverse while omnipresent geopolitical unease ensures the market remains in a constant wobble on a forever shifting trade war axis,” Innes said.
Tokyo’s Nikkei 225 on Friday closed down 169.34 points, or 0.8 percent, at 21,878.90, dropping 0.9 percent from a close of 22,079.09 on Sept. 20, as many companies went ex-dividend.
Seoul’s KOSPI on Friday dropped 24.59 points, or 1.2 percent, to 2,049.93, a plunge of nearly 2 percent from 2,091.52 a week earlier.
Trade in Hong Kong and Shanghai was cautious ahead of a week-long holiday to mark the 70th anniversary of the founding of the People’s Republic of China.
The Hang Seng on Friday slipped 87.12 points, or 0.3 percent, to 25,954.81, diving 1.8 percent from a close of 26,435.67 on Sept. 20.
The Shanghai Composite on Friday edged up 3.08 points, or 0.1 percent, to 2,932.17, but plummeted 2.4 percent from 3,006.4 a week earlier.
Singapore and Malaysia retreated, while Sydney rose 0.6 percent, one of the few Asian markets to see any gains.
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