Taipei--Shares in Taiwan closed slightly lower Tuesday as the bellwether electronics sector lost ground, led by chip maker Taiwan Semiconductor Manufacturing Co. (TSMC,???), the most heavily weighted stock in Taiwan's stock market, dealers said.
Market sentiment took a hit after MSCI Inc. cut Taiwan's weighting in the MSCI Emerging Markets Index, which is closely watched by foreign investors, they said.
Despite selling in the high-tech sector, the old economy and financial sectors remained resilient to support the broader market, helping the weighted index remain above the 10,000-point mark at the close, dealers said.
The Taiex closed down 5.33 points, or 0.05 percent, at 10,031.49, after moving between 9,991.08 and 10,058.59 Tuesday on turnover of NT$102.43 billion (US$3.40 billion).
The market opened up 0.76 points and rose to the day's high on follow-through buying from Monday, when the weighted index closed above the 10,000-point level for the second time in three sessions, dealers said.
But some investors soon shifted to the sell side to pocket their earlier gains in the electronics sector, in particular TSMC after a European brokerage cut its target price for TSMC shares, dealers said.
After the index fell below 10,000 points, however, some bargain hunting emerged, especially in the non-high-tech sector, to vault the index back above that level by the end of the session, dealers added.
"After the weighted index breached 10,000 points, many investors turned cautious fearing a possible major correction," Mega International Investment Services Corp. analyst Alex Huang said.
"So TSMC's target price downgrade was used as an excuse to lock in their earlier gains."
TSMC, the world's largest contract chip maker and the most heavily weighted stock on the exchange, fell 0.73 percent to close at NT$204.50, with 33.22 million shares changing hands, after its target price was cut to NT$202 from NT$205.
Led by TSMC, the bellwether electronics sector ended down 0.49 percent. Among other falling high-tech stocks, integrated circuit designer MediaTek Inc. (???) lost 1.40 percent to close at NT$211.50, and metal casing maker Catcher Technology Corp. (??) shed 1.06 percent to end at NT$327.00.
"Investors were also reacting to MSCI's move to cut Taiwan's weighting in its indexes. But I expect the impact to be short-lived because the reduction was minor," Huang said.
According to MSCI, Taiwan's weighting in the MSCI Emerging Markets Index was lowered to 12.04 percent from 12.09 percent after remaining unchanged following the previous review.
"Fortunately, buying rotated to old economy and financial stocks and that's why the weighted index came off an early low and returned to 10,000 points," Huang said.
"But it remains to be seen whether the market can stay above 10,000 amid expectations of a rate hike by the U.S. Federal Reserve in June."
In the petrochemical sector, Formosa Petrochemical Corp. (???) gained 2.35 percent to close at NT$109.00 after an international crude oil price rebound overnight, and Taiwan Cement Corp. (??) soared 1.45 percent to end at NT$35.10 on its first quarter results.
Taiwan High Speed Rail Corp. (THSRC, ????) shed 3.16 percent to NT$22.95 even though MSCI added the stock to the MSCI Global Standard Indexes.
Source: Focus Taiwan News Channel