Taipei--Shares in Taiwan closed lower on Wednesday after investors locked in earlier gains, pushing down the broader market ahead of the nearest technical resistance at about 10,500 points, dealers said.
Many investors chose to cut their holdings for the moment amid caution during the on-going earnings season on Wall Street as well as a two-day U.S. Federal Reserve policymaking meeting, which started on Tuesday, they said.
The weighted index on the Taiwan Stock Exchange closed down 44.04 points, or 0.42 percent, at 10,419.11, after moving between 10,416.57 and 10,500.11, on turnover of NT$107.60 billion (US$3.54 billion).
The market opened up 0.13 percent and moved higher to breach 10,500 points as investors took their cue from a higher Wall Street, where the Dow Jones Industrial Average closed up 0.47 percent and the S&P 500 Index ended up 0.29 percent to hit a new high overnight, dealers said.
However, after the index breached 10,500 points, selling emerged, focusing on large cap stocks, in particular in the Apple Inc. supply chain, such as smartphone camera lens maker Largan Precision Co. (???) and iPhone assembler Hon Hai Precision Industry Co. (??), ensuring the main board closed below the 10,500 level, they said.
Outperforming the main board again, the over-the-counter (OTC) market index ended up 0.52 percent at 139.95 points as investors moved funds out of market heavyweights, opting to park their money in the OTC's smaller cap stocks, dealers said.
"Without a rising electronics sector, it was no surprise that the main board failed to jump over the stiff technical barriers ahead of 10,500 points," said Mega International Investment Services Corp. analyst Alex Huang. "The local main board was still consolidating, with investors waiting for the results of U.S. high tech firms, which are highly correlated to Taiwan's electronics sector."
Huang said the weakness of the local main board came as investors rushed to pocket earlier gains amid fears over possible volatility on Wall Street during the earnings season.
Among the falling "Apple concept stocks, which were the focus of Wednesday's downward pressure, Largan, the most expensive stock on the local market, fell 1.88 percent to close at NT$5,495.00, off an early high of NT$5,610.00, while Hon Hai, the world's largest contract electronics producer, lost 1.28 percent to end at NT$115.50 after hitting NT$117.50.
Selling also spread to Taiwan Semiconductor Manufacturing Co. (TSMC, ???), which is believed to supply A11 processors for the next generation iPhone, with shares falling 0.47 percent to close at NT$213.00, off an early high of NT$215.00.
"Investors have been watching how Apple will report its results for last quarter and give guidance for the current quarter as the firm is most closely connected to the local high tech sector," Huang said. Taiwanese suppliers to Apple account for about 40 percent of total market capitalization on the local bourse.
Apple has scheduled an investor conference for Aug. 1.
In the non-high tech sector, shares in Formosa Plastics Corp. (??) shed 1.32 percent to close at NT$90.00 and textile supplier Far Eastern New Century Corp. (???) lost 0.41 percent to end at NT$24.40, while China Steel Corp. (??), the largest steel maker in Taiwan, rose 0.20 percent to close at NT$24.60.
"The Fed meeting also dictated market sentiment at home and abroad," Huang said. "Many investors simply wanted more clues about when the Fed will downsize its balance sheet by cutting bond holdings, which will affect liquidity in global equity markets."
Source: Focus Taiwan News Channel