Shares in Taiwan moved lower Monday with selling sparked by losses on U.S. markets at the end of last week amid rising concerns over a possible recession due to the current rate hike cycle by the Federal Reserve, dealers said.

Large cap stocks in the electronics sector along with their old economy counterparts in the petrochemical and steel sectors were the targets of the sell-off, while the biotech industry bucked the downturn as investors sitting on ample funds rushed to park their money there, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 95.23 points, or 0.66 percent, at 14,433.32 after moving between 14,411.81 and 14,493.72. Turnover totaled NT$206.59 billion (US$6.72 billion).

The market opened up 0.34 percent in the wake of a 0.85 percent decline on the Dow Jones Industrial Average and a 0.97 percent fall on the tech-heavy Nasdaq index on Friday as fears loom over a recession, with the Fed hinting its rate hike will continue into next year, dealers said.

The Taiex lost momentum with semiconductor heavyweights in focus, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), as foreign institutional investors stood on the sell side. According to the TWSE, foreign institutional investors sold a net NT$13.89 billion worth of shares on the main board, dealers added.

"With the Christmas and new year holidays moving closer, it seemed that many foreign institutional investors prefer to cut their holdings and pocket their gains for the moment before going on vacation," Moore Securities Investment Consulting analyst Adam Lin said.

"These foreign institutional investors simply seized on worries over a recession on U.S. markets as an excuse to sell and large cap stocks, in particular TSMC, fell victim to the selling," Lin said.

TSMC, the most heavily weighted stock on the local market, fell 0.96 percent to close at NT$466.50. The stock's losses led the electronics sector and the semiconductor sub-index to move lower by 0.69 percent and 0.97 percent, respectively, contributing almost 40 points to the Taiex's fall.

Among other large cap semiconductor stocks, power management IC designer Silergy Corp. shed 6.26 percent to end at NT$471.50, United Microelectronics Corp., a smaller contract chipmaker, lost 3.05 percent to close at NT$42.95, and smartphone IC designer MediaTek Inc. fell 0.61 percent to end at NT$565.00.

Outperforming its peers, TSMC's application-specific integrated circuit (ASIC) design unit Global Unichip Corp. rose 3.18 percent to close at NT$812.00, and Powerchip Semiconductor Manufacturing Co., another smaller contract chipmaker, gained 0.77 percent to end at NT$32.90.

"Selling was also seen among large old economy and financial stocks as recession fears struck investors' nerves," Lin said.

The petrochemical sector lost 1.17 percent with Formosa Plastics Corp. falling 1.48 percent to close at NT$86.30, and Nan Ya Plastics Corp. dropping 1.38 percent to end at NT$71.50.

The steel sector also shed 3.07 percent after China Steel Corp., the largest steel maker in Taiwan, lost 3.74 percent to close at NT$28.30, and rival Tung Ho Steel Enterprise Corp. dropped 3.38 percent to end at NT$51.50.

Elsewhere in the old economy sector, textile brand Far Eastern New Century Corp. lost 3.99 percent to close at NT$31.30, and Taiwan Cement Corp. dropped 2.17 percent to end at NT$33.85.

In the financial sector, performance was mixed, finishing down 0.05 percent, with CTBC Financial Holding Co. losing 0.90 percent to close at NT$22.05, while Fubon Financial Holding Co. gained 0.989 percent to end at NT$56.60.

"Although foreign institutional investors turned away from the trading floor, some local major players appear willing to trade, but today they just parked their money in the biotech industry for hedging purposes," Lin said.

In the biotech industry, which rose 1.50 percent, shares in injectable medicine supplier Nang Kuang Pharmaceutical Co. soared 10 percent, the maximum daily increase, to close at NT$56.20, drug brand ScinoPharm Taiwan, Ltd. gained 6.48 percent to close at NT$27.10, and YungShin Global Holding Corp. another drug developer, rose 4.32 percent to close at NT$45.90.

"I expect trading will be quiet with more and more foreign institutional investors away," Lin said. "But year-end buying by conglomerates to boost share prices and dress up their books could lend some support to the Taiex with the nearest technical support likely to be seen ahead of 14,313 points, the 120-day moving average."

Source: Focus Taiwan News Channel