Taiwan shares end down after U.S. markets fall

Taipei, Shares in Taiwan moved lower Friday to close below the 10,900point mark as investors reacted to a fall in the U.S. markets overnight in the wake of disappointing corporate earnings reports, dealers said.

The losses were capped, however, on expectations that the U.S. Federal Reserve will cut key interest rates at its next policymaking meeting next week amid trade tensions between the United States and China, which have affected the economy, dealers added.

The weighted index on the Taiwan Stock Exchange (TWSE), the Taiex, ended down 49.43 points, or 0.45 percent, at 10,891.98, after moving between 10,879.24 and 10,907.44, on turnover of NT$110.84 billion (US$3.57 billion).

The market opened down 0.39 percent in reaction to a 0.47 percent fall on the Dow Jones Industrial Average and a 0.53 percent decline on the S and P 500 index on Thursday after American Airlines and electric car brand Tesla reported disappointing second quarter results, dealers said.

The weakness in Taiwan continued into the morning, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) after investors here saw the Philadelphia Semiconductor Index shed 1.72 percent overnight, they said.

"The U.S. markets still dictate Taiwan's market, so when U.S. stocks fell, their Taiwanese counterparts followed," Hua Nan Securities Investment Management Chairman David Chu said.

"The silver lining was that the losses on the Taiex seemed to be limited as they were on the Dow since there are expectations the Fed will lower interest rates next week," Chu said.

The next twoday Fed policymaking meeting will open July 30, and the market has widely anticipated the U.S. central bank will cut its key interest rates by 0.25 percentage points.

"So the global equity markets have been moved by news of the possible rate cut in recent sessions and such hopes have helped the markets fend off some downward pressure," Chu said.

In Taiwan, TSMC, the most heavily weighted stock in the local market, fell 1.51 percent to close at NT$261.00 with 20.40 million shares changing hands. TSMC's loss pushed down the semiconductor subindex by 1.22 percent and contributed about 40 points to the Taiex's decline.

Selling in TSMC spread to other semiconductor stocks, with United Microelectronics Corp., a smaller rival of TSMC, down 2.58 percent to close at NT$13.20, and IC packaging and testing service provider ASE Technology Holding Co. closing 1.97 percent lower at NT$69.60.

Also in the electronics sector, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., lost 2.52 percent to close at NT$4,255.00, and iPhone assembler Hon Hai Precision Industry Co. dropped 0.25 percent to end at NT$78.40.

AU Optronics Inc., one of Taiwan's leading flat panel makers, shed 2.50 percent to close at NT$8.59 after reporting a net loss for the third consecutive quarter in the second quarter.

Dealers said old economy stocks generally moved lower, which further dragged down the broader market.

Food brand UniPresident Enterprises Corp. fell 1.33 percent to close at NT$81.30, and Hotai Motor Co., the local sales agent for Japan's Toyota Motor Corp., shed 1.95 percent to end at NT$452.00.

In the financial sector, which fell 0.27 percent, Fubon Financial Holding Co. fell 0.91 percent to close at NT$43.50, and Cathay Financial Holding Co. lost 0.2 percent to end at NT$41.15.

"Technically speaking, it is unlikely the market will stage a significant rebound since there is strong technical resistance ahead of 11,000 points," Chu said.

"In addition, once the Fed meeting ends, investors here will shift their attention to August sales reports, so they are likely to remain cautious," Chu said.

According to the TWSE, foreign institutional investors sold a net NT$5.13 billion in shares on the Taiwan Stock Exchange on Friday.

Source: Focus Taiwan News Channel