Taiwan shares yesterday closed lower as investors turned cautious ahead of the results of a US Federal Reserve policymaking meeting later in the day, while the settlement date for futures contracts for this month also led to volatility on the spot market throughout the session, dealers said.
After Tuesday’s rally of 0.92 percent, the main board fell into consolidation mode yesterday as investors waited for the outcome of the Fed meeting, dealers said.
“Although few in the market expect the Fed to announce tighter liquidity at the meeting, many still expect the US central bank to address possible inflationary pressure, which could dictate its monetary policy in the future,” Hua Nan Securities Co (華南永昌證券) analyst Kevin Su (蘇俊宏) said, referring to a 5 percent spike in the US consumer price index for last month.
“Before the Fed speaks, many investors at home and abroad preferred to cut their holdings to avoid more losses down the road,” Su said.
The New Taiwan dollar fell against the US dollar yesterday, down NT$0.039 to close at NT$27.691.
Turnover of the NT dollar totaled US$1.026 billion during the trading session, central bank data showed.
The TAIEX closed down 63.43 points, or 0.37 percent, at 17,307.86, on turnover of NT$567.565 billion (US$20.5 billion).
Foreign institutional investors sold a net NT$18.18 billion of shares on the main board yesterday, Taiwan Stock Exchange data showed.
The futures settlement yesterday was likely the reason for the foreign institutional selling, dealers said.
The bellwether electronics sector fell 0.61 percent as investors locked in profits built a session earlier.
“In Taiwan, the electronics sector became the target of the selling, but the downturn was not intolerable,” Su said.
Semiconductors led the entire tech sector to move lower, with contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) down 0.66 percent to NT$605 after a 1.27 percent drop in its US depositary receipts on the US market overnight, Su said.
Among other semiconductor stocks, United Microelectronics Corp (聯電) lost 2.42 percent, smartphone IC circuit designer MediaTek Inc (聯發科) fell 0.40 percent and application-specific IC designer Alchip Technologies Ltd (世芯) dropped 4.84 percent.
“As long as TSMC can maintain its price well above the NT$600 mark, the stock will remain technically healthier and optimism toward its business prospects is expected to provide support to its shares,” Su said.
“The silver lining was that rotation buying remained active in the current market awash in liquidity,” he said. “So some old-economy stocks attracted interest in a cyclical recovery.”
Meanwhile, large shipping stocks were highlighted amid optimism over an uptrend in freight rates at a time of tight cargo service supply worldwide.
The transportation sector accounted for more than 50 percent of the Taiwan Stock Exchange’s total turnover due to strong interest.
Wan Hai Lines Ltd (萬海航運) shares soared 7.31 percent and Yang Ming Marine Transport Corp (陽明海運) rose 1.96 percent, but Evergreen Marine Corp (長榮海運) fell 1.84 percent.
Petrochemical stocks were boosted by an increase in prices for international crude oil to an almost three-year high overnight, with Formosa Petrochemical Corp (台塑石化) increasing 2.76 percent, Taita Chemical Co (台達化) gaining 1.67 percent and Formosa Chemicals & Fibre Corp (台灣化纖) adding 1.06 percent.
“In addition to the Fed meeting, investors had better keep a close eye on crude prices,” Su said.
“If crude prices continue to climb, worries over inflationary pressures will go deeper,” he added.
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