Taiwan shares end down after referendum in Italy

Shares in Taiwan closed down slightly lower Monday as investors were still assessing the impact of a failed Italian referendum on global financial markets, dealers said.

Despite selling pressure, gains by select large-cap stocks, such as contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電), Fubon Financial Holding Co. (富邦金) and Cathay Financial Holding Co. (國泰金), prevented the index from falling further, they said.

The weighted index on the Taiwan Stock Exchange ended down 28.83 points, or 0.31 percent, at 9,160.66, after moving between 9,138.64 and 9,212.19, on turnover of NT$62.16 billion (US$1.94 billion).

The market opened 4.97 points higher and rose to the day’s high in the first five minutes of trading on a technical rebound from a session earlier, when the index fell 0.80 percent.

But downward pressure quickly set in as investors reacted to the defeat of the referendum in Italy, which attempted to push through constitutional reforms, dealers said.

Selling continued for the rest of the session, dragging down the weighted index below the 60-day moving average of around 9,140 points at one point, but some bargain hunters turned active at the end of the session to stabilize the broader market, they said.

“Despite the failure of the passage of the referendum in Italy, selling in the local market was not overly heavy today as many investors still needed time to digest the news and evaluate the possible consequences,” MasterLink Securities analyst Tom Tang said.

The referendum was proposed by Italian Prime Minister Matteo Renzi, and he stepped down in the wake of the proposal’s defeat.

The opposition that supports an exit from the European Union may emerge as the country’s mainstream party, which could have dire consequences for debt-heavy Italy and the global banking sector.

“Many investors here are waiting for the response from European markets and Wall Street to the referendum’s result before they take clear action in the local market,” Tang said.

“That’s why some investors were willing to pick up TSMC and other heavyweights to support the broader market today.

“But today’s trading volume remained thin as many investors remained on the sidelines for the time being, pointing to cautious sentiment about the vote in Italy,” he said.

The bellwether electronics sector closed down 0.05 percent, outperforming the broader market after TSMC, the most heavily weighted stock in the local market, rose 0.56 percent to end at NT$179.00, with 29.20 million shares changing hands.

But Apple concept stocks largely remained slow amid lingering concerns over shipments of the latest iPhone 7 models worldwide, dealers said.

Among them, smartphone camera lens supplier Largan Precision Co. (大立光) lost 0.83 percent to close at NT$3,580.00 and Hon Hai Precision Industry Co. (鴻海), an assembler of iPhones and iPads, fell 0.49 percent to end at NT$81.30.

Though the financial sector ended down 0.34 percent, Fubon Financial gained 0.37 percent to close at NT$51.00, and Cathay Financial added 0.63 percent to end at NT$48.30.

Tang said selling focused on old economy stocks, in particular in the petrochemical and steel sectors, as investors locked in their gains built in recent sessions on increases in global commodity prices.

Among the falling old economy stocks, Formosa Plastics Corp. (台塑) fell 1.20 percent to close at NT$90.30, Nan Ya Plastics Corp. (南亞) lost 1.02 percent to end at NT$68.20, and China Steel Structure Co. (中鋼構) dropped 0.82 percent to close at NT$22.35.

Source: Focus Taiwan News Channel

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