Taiwan shares close down on profit taking; turnover expands

Taipei--Shares in Taiwan closed lower with turnover expanding to top NT$100 billion (US$3.22 billion) on Thursday, the first trading session in the Year of the Rooster after a six-day Lunar New Year holiday, as investors took profits amid concerns over U.S. trade policies under the administration of President Donald Trump, who has advocated protectionism, dealers said.

Market sentiment remained cautious, despite an upturn earlier in the session, with investors waiting for upcoming sales reports for January due later this month, on fears that the current slow season could compromise the performance of many semiconductor makers, they said.

The weighted index on the Taiwan Stock Exchange closed down 18.98 points, or 0.20 percent, at 9,428.97, after moving between 9,413.77 and 9,521.34, on turnover of NT$132.77 billion.

The market opened up 0.59 percent to pass the 9,500 point mark and continued higher as more funds flowed into the country, dealers said, referring to the stronger Taiwan dollar.

However, once the index hit an intraday high, traders started to sell non-high tech stocks, particular in the financial sector, while smartphone camera lens supplier Largan Precision Co. (???), the most expensive stock in Taiwan, hit a record high to lend support to the electronics sector, preventing the broader market from falling any further by the end of the session, they said.

"There has been strong technical resistance after the index breached 9,500 points. It was understandable that many investors simply seized on the earlier gains to pocket profit amid fears of a pullback after the index hit that level" Mega International Investment Services Corp. analyst Alex Huang said.

In addition, Huang said that local investors remain concerned over Trump's trade protectionism and were reluctant to hold onto their shares for the moment.

"Since Trump signed the executive order banning travelers from seven Muslim countries, fears have risen that the U.S. President will introduce more measures to reflect his protectionist ideology, which could hurt global trade and export-oriented countries, like Taiwan," Huang said.

Fortunately, Huang said, selling was offset partly by a higher Largan, a supplier to Apple, which moved up after the U.S. consumer electronics giant reported better than expected earnings for the fourth quarter of last year.

Largan closed up 2.25 percent at NT$4,550.00, off an early high of NT$4,580.00, with 1.11 million shares changing hands. The closing level was the highest in Largan's history with investors cheered by Apple's earnings report which listed the firm's earnings per share for the three month period as US$3.36, compared with an early market estimate of US$3.22.

However, the performance of other Apple suppliers was mixed on Thursday. Among them, contract chip maker Taiwan Semiconductor Manufacturing Co. (???), the most heavily weighted stock on the local market, fell 0.54 percent to end at NT$184.50, off an early high of NT$188.50, with investors cautious about the firm's January sales during the current slow season.

Shares in Hon Hai Precision Industry Co. (??), an assembler of iPhones and iPads, closed up 0.48 percent at NT$84.10 after earlier hitting NT$85.70.

In the financial sector, which closed down 0.58 percent, shares in Cathay Financial Holding Co. (???) shed 1.26 percent to end at NT$46.90 and Fubon Financial Holding Co. (???) lost 0.99 percent to close at NT$50.10 also on profit taking.

"Despite the moderate index decline at the end of the session, turnover exploded to more than NT$100 billion, indicating that many investors scrambled to unload their holdings today. I suspect that they were downbeat about Trump's future trade policies," Huang said. "The expanded trading volume in a down market has made the local main board technically weaker."

According to the TWSE, foreign institutional investors bought a net NT$591 million worth of shares on the main board on Thursday.

Source: Focus Taiwan News Channel