Shares in Taiwan closed lower Wednesday after Wall Street fell overnight amid renewed worries over a possible interest rate hike by the U.S. Federal Reserve, dealers said.
Bloomberg News reported Tuesday that the European Central Bank could soon wind down its quantitative easing policy, leading investors to turn cautious about the market's liquidity and not chase prices after the gains seen the previous two sessions, dealers said.
The weighted index on the Taiwan Stock Exchange closed down 15.49 points, or 0.17 percent, at 9,272.28, after moving between 9,244.41 and 9,276.13, on turnover of NT$60.02 billion (US$1.91 billion).
The market opened down 0.29 percent in reaction to weakness in U.S. markets overnight, including a 0.47 percent fall by the Dow Jones Industrial Average and a 0.50 percent drop in the S and P 500 index.
The losses in the U.S. came after Richmond Fed President Jeffrey Lacker said he saw a strong case for raising interest rates and keeping inflation under control.
Market sentiment was also undermined by Bloomberg's report that the ECB could tighten liquidity, which boosted bond yields in the European market overnight and led investors in Taiwan to unload large-cap stocks on the main board, dealers said.
"Investors simply used the Fed and ECB concerns as an excuse to lock in the gains they built in the past two trading sessions," Concord Securities analyst Kerry Huang said.
"But it's also true that depleted liquidity through a rate hike by the Fed and an ECB decision to cut bond purchases is the last thing investors want to see."
Selling focused on "Apple concept stocks," Huang said.
Metal casing supplier Catcher Technology Co. (??) fell 1.91 percent to close at NT$257.00, and smartphone camera lens maker Largan Precision Co. (???) lost 1.02 percent to end at NT$3,870.00.
Hon Hai Precision Industry Co. (??), an assembler of iPhones and iPads, bucked the trend, rising 0.13 percent to close at NT$79.60.
Taiwan Semiconductor Manufacturing Co. (TSMC, ???), the most heavily weighted stock on Taiwan's market, shed 0.53 percent to end at NT$186.00, with 19.12 million shares changing hands.
TSMC's lower finish helped drag down the bellwether electronics sector by 0.12 percent, but Huang said it was not cause for great concern.
"Despite TSMC's fall, the downward pressure was not too strong and not many investors were in a rush to dump the stock today, which kept the weighted index from further losses by the close," Huang said.
In the non-high-tech sector, which was mixed, Formosa Plastics Corp. (??) fell 0.51 percent to close at NT$78.50, while food maker Uni-President Enterprises Corp. (??) rose 0.16 percent to end at NT$62.80.
Cathay Financial Holding Co. (???) ended down 0.87 percent at NT$40.10.
"Though share prices fell, the main board remained technically sound, and the general trend upward remains intact," Huang said, referring to continued buying by foreign institutional investors.
According to the TWSE, foreign institutional investors bought a net NT$2.30 billion in shares Wednesday.
In 11 trading sessions since Sept. 19, foreign investors have been net buyers of shares nine times.
Source: Focus Taiwan News Channel