Taiwan shares end below 9,300 points

Taipei, Shares in Taiwan closed below 9,300 points on Monday as investors took their cue from the weakness of other regional markets, in particular the China market, to push the local index lower, dealers said.

Dealers remained cautious ahead of the inauguration of U.S. President-elect Donald Trump on Jan. 20, with many investors choosing to maintain a high level of liquidity until they develop a clearer picture of the new U.S. administration's economic policies, they said.

Selling on the local main board focused on liquid large-cap stocks in both electronics and non-high tech sectors as foreign institutional shifted to the sell side to avoid further volatility ahead of the local futures market settlement for January scheduled for Wednesday, they added.

The weighted index on the Taiwan Stock Exchange (TWSE) closed down 86.50 points, or 0.92 percent, at 9,292.33, after moving between 9,281.21 and 9,359.01, on turnover of NT$57.26 billion (US$1.8 billion). Foreign institutional investors sold a net NT$5.83 billion worth of shares on the main board.

The market opened down 0.24 percent on follow-through selling from the earlier session, when the main board ended down 0.33 percent. Downward pressure on local shares escalated as investors watched the Shanghai and Shenzhen equity markets fall amid fears that China will allow more initial public offerings, which could result in lower share prices due to an increase in supply, dealers said.

Market heavyweights such as contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???), Cathay Financial Holding Co. (???) and Formosa Petrochemical Corp. (???) trended lower, pushing the broader market to below 9,300 points for the first time since Jan. 4, when the index ended at 9,286.96.

"The losses in the China market triggered a response in the local equity market as many investors are afraid that an increase in supply from IPOs will push down share prices and create volatility not only in China but also in regional markets," Concord Securities analyst Jerry Huang said.

"Investors simply seized on the weakness of the China market as a reason to unload their local shares today, like TSMC, which gave cautious guidance for the first quarter of this year," Huang said.

The electronics sector closed down 0.75 percent and the semiconductor sub-index ended 1.04 percent lower after TSMC, the most heavily weighted stock on the local market, fell 1.10 percent to close at NT$179.50 with 30.76 million shares changing hands. TSMC forecast that its sales for the January-March period, a traditionally slow time for the semiconductor industry, will fall 8.8-10 percent from the previous quarter, lagging behind an earlier market forecast of a 5-8 percent sequential drop.

"Previously, the market had expected TSMC would have some technical support around NT$180, but the stock fell below that level, making many investors nervous," Huang said, adding that the next technical support for TSMC will be around NT$178.00.

Among petrochemical stocks, Formosa Petrochemical shed 3.24 percent to close at NT$104.50, Formosa Plastics Corp. (??) fell 1.76 percent to end at NT$89.40, Formosa Chemicals & Fiber Corp. (??), lost 1.22 percent to close at NT$97.50, and Nan Ya Plastics Corp. (??) ended down 0.95 percent at NT$72.70.

The four stocks fall under conglomerate Formosa Plastics Group's (????) corporate umbrella, and Huang said they had gained in recent sessions on the back of a rebound in crude oil prices so investors rushed to lock in profits.

In the financial sector, which closed down 1.30 percent, shares in Cathay Financial fell 2.27 percent to end at NT$47.30 and Fubon Financial Holding Co. (???) lost 1.75 percent to close at NT$50.40 amid worries that a fall in U.S. treasury yields could compromise investment returns.

"Before Trump takes office, investors have turned cautious, waiting for his economic policies as every move made by the largest economy in the world could affect the global financial markets," Huang said.

"With the weighted index falling below 9,300 points, the local main board could see some support at the 20-day moving average of about 9,256 points," Huang added.

Source: Focus Taiwan News Channel