Taipei--Shares in Taiwan fell on Tuesday, led by the bellwether electronics sector, as market sentiment was haunted by weakness in tech stocks in U.S. markets overnight, dealers said.
Large cap electronics stocks such as contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???) and iPhone assembler Hon Hai Precision Industry Co. (??) lost ground as the market's weighted index, the Taiex, fell below 10,400 points, they said.
Non-high tech stocks, in particular in the financial, raw material and shipping sectors, remained resilient and bucked the downturn on the broader market, they added.
The Taiex closed down 65.01 points, or 0.62 percent, at the day's low of 10,347.78, off an early high of 10,421.72, on turnover of NT$91.998 billion (US$3.02 billion).
The market opened down 0.14 percent in reaction to a fall among high-tech stocks in the U.S. market, where the tech-heavy Nasdaq fell 0.49 percent and the Philadelphia Semiconductor Index lost 1.39 percent overnight, dealers said.
The downturn suffered by U.S. tech stocks led investors here to shrug off the 0.61 percent gains posted by the Dow Jones Industrial Average on Monday, dealers added.
Selling in local electronics heavyweights accelerated in the afternoon to push the Taiex down to the day's low at the close, but the old economy and financial sectors helped limit the broader market's downturn, dealers said.
"Tech stocks in the U.S. market have been highly correlated with their counterparts in Taiwan," Mega International Investment Services Corp. Alex Huang said.
"The fall on Wall Street showed fears of those tech stocks' high valuations. Such fears also spread to Taiwan."
TSMC, the most heavily weighted stock in the local market, fell 0.96 percent to close at the day's low of NT$207.00, with 21.13 million shares changing hands.
Hon Hai, which has the second highest market capitalization of any listed company in Taiwan, closed down 3 percent at its low for the day of NT$113.00.
Pulled down by TSMC and Hon Hai, the electronics sub-index lost 1.07 percent to close at 432.27.
Also in the high-tech sector, flat panel maker AU Optronics Corp. (??) fell 2.95 percent to close at NT$13.15, and rival Innolux Corp. (??) shed 2.96 percent to end at NT45.85.
But Largan Precision Co. (???), a smartphone camera lens supplier to Apple Inc., rose 0.21 percent to close at NT$4,770.00.
"While investors dumped electronics stocks, they moved their funds to the old economy and financial sectors, which appeared cheaper than the high-tech sector," Huang said.
In the financial sector, which gained 0.42 percent, Cathay Financial Holding Co. (???) and Fubon Financial Holding Co. (??) continued to move higher, up 1.44 percent and 0.32 percent, respectively, to close at NT$49.30 and NT$47.00 after the two stocks went ex-dividend Monday.
Among the gaining old economy stocks, Evergreen Marine Corp. (????) rose 4.32 percent to close at NT$16.90, and Yang Ming Marine Transport Corp. (????) added 3.42 percent to end at NT$13.60 on the back of an increase in ocean freight rates.
"Worries over further volatility among U.S. tech stocks will likely continue to affect electronics shares. But with the electronics sub-index moving closer to the nearest technical support level -- the 20-day moving average of 425 points -- I think a technical rebound will follow," Huang said.
"More importantly, with the second half of the year a peak season for the electronics industry, when the index moves closer to 425 points, it might be a good buying point," he said.
Source: Focus Taiwan News Channel