Taiwan shares end down after Wall Street fall, interest concerns

Taipei--Shares in Taiwan closed lower Friday, extending losses from a session earlier, as investors took cues from a pullback on Wall Street overnight to keep cutting their holdings, dealers said.   Market sentiment turned cautious amid rising concerns over a possible interest rate hike by the U.S. Federal Reserve in an upcoming policymaking meeting, while many investors were waiting for what Fed Chair Janet Yellen will say in a meeting planned by the Executives Club of Chicago later in the day, the dealers said.   Selling focused on large-cap stocks almost across the board to push down the weighted index below the 20-day moving average at around 9,685 points at the end of the session, they said.   The weighted index on the Taiwan Stock Exchange ended down 43.59 points, or 0.45 percent at 9,648.21, after moving between 9,633.88 and 9,679.82, on turnover of NT$84.01 billion (US$2.71 billion).   The market opened down 0.20 percent after the losses on Wall Street, where the Dow Jones Industrial Average closed down 0.53 percent and the S&P 500 index ended 0.59 percent lower on technical correction overnight, the dealers said.   Selling on the local main board continued to keep the index below the previous closing level for the rest of the session in reflection of escalating fears of a rate hike by the Fed, the dealers added.   "The main board has become technically weaker after the weighted index ended below the 20-day moving average," said KGI Securities analyst Phil Chu. "So it is possible that the weakness will continue until the nearest technical support at around 9,600 points," he added.   Several Fed officials have voiced the possibility of an immediate rate hike. Federal Reserve Governor Jerome Powell joined the growing listing of these Fed officials, saying in an interview on Thursday that conditions relating to inflation and employment have come close enough to the Fed's goal and that the central bank will consider seriously raising rates in March.   "Now the chance for a rate hike in the March Fed meeting has risen to more than 80 percent. Such an interest rate increase specter is expected to keep haunting the global financial markets until the two-day meeting is wrapped up March 15," Chu said. "Once the Fed raises interest rates, the U.S. dollar will become stronger, which will lead foreign investors to move funds out of the region. Depleting liquidity is the last thing equity investors want to see," he said.   Chu said that market heavyweights in both the electronics and non-high-tech sectors were highlighted by downward pressure throughout the session.   Among the falling electronics stocks, Taiwan Semiconductor Manufacturing Co. (TSMC, ???), the most heavily weighted stock in the local market, lost 1.08 percent to close at NT$184.00, with 28.20 million shares changing hands. Led by TSMC, the electronics sector ended down 0.52 percent.   Also in the electronics sector, integrated circuit designer MediaTek Inc. (???) lost 1.79 percent to close at NT$219.50, and Hon Hai Precision Industry Co. (??), the world's largest contract electronics maker, lost 0.89 percent to end at NT$88.80.   In the old economy sector, China Steel Corp. (??), the largest steel maker in Taiwan, fell 1.16 percent to close at NT$25.55, Nan Ya Plastics Corp. (??) lost 1.53 percent to end at NT$70.90, and Eclat Textile Co. (??) shed 3.37 percent to close at NT$301.50.   "Investors had better watch closely whether foreign institutional investors will continue to cut their long position contracts in futures, which will bode ill for the spot market," Chu said.   According to the TWSE, foreign institutional investors sold a net NT$4.99 billion-worth of shares on the main board Friday.     Source: Focus Taiwan News Channel