Taiwan stocks tumbled 1.8 percent yesterday on profit-taking on concerns that the market has adequately reflected bullish fundamental news and on worries that the US Federal Reserve may hike rates again, traders said. The benchmark weighted price index fell 152.18 points to 8073.97. Turnover was NT$116.3 billion (US$3.65 billion), down from Thursday's final tally of NT$162.9 billion.
"Broadly speaking, the market continues to face profit-taking. But in a more narrow perspective, many feel that electronics and plastics shares have already reflected various positive fundamental news," said Kevin Pi, a trader from China Securities.
Pi said semiconductor-related shares in particular have begun to lose momentum over the past session or so despite reported strong DRAM prices and hikes in foundry prices.
"When shares stall amidst good news, one has to be concerned that prices have fully reflected the news," he said, adding that the same situation is being seen in plastics shares, many of which have risen sharply lately on expectations that hikes in mid-stream petrochemical prices will boost bottom lines.
Brokers said some investors were unnerved by a report that Morgan Stanley Dean Witter has recommended clients don't further boost holdings in Taiwan stocks for the time being. They added some are concerned that after the market ended well off highs on Thursday, the originally expected technical break-out after the index broke through 8250 points on Wednesday may fall through.
"With the market falling back under 8200 points early today, one has to turn more conservative on the technical picture," said Austin Hung, a broker at Concord Securities.
Some added the market was impacted by the overnight loss in the US market on concerns the US Fed may be forced to hike interest rates again in the near future to squelch inflationary pressure.
Financial shares were among the largest losers on a lack of fresh leads.
Construction titles were relatively unscathed as the sector had already lagged the market's recent gains and therefore faced less selling.
All sectors fell, with plastics shares dropping the most in percentage terms.
The index today is seen trading between 7950 and 8200 points.
FUTURES: The September TAIFEX Taiwan index futures contract closed at 8132 points, versus Thursday's close of 8352 points. Volume stood at a preliminary 3542 contracts.
Meanwhile, the September SIMEX MSCI Taiwan index futures contract ended at 355.3, down from Thursday's close of 367.3 on a preliminary 6089 contracts.
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