Taiwan shares end lower on Wall Street retreat

Taipei-Shares in Taiwan closed lower Wednesday as investors took cues from losses suffered on Wall Street in the wake of disappointing corporate earnings, but the main board still managed to stand above 11,200 points due to ample liquidity, dealers said.

Selling pushed down contract chipmaker Taiwan Semiconductor Manufacturing Co, (TSMC) as investors continued to pocket earlier gains on the back of optimism toward the firm's business outlook, while buying rotated to other large-cap tech stocks, such as iPhone assembler Hon Hai Precision Industry Co., which lent some support to the broader market, the dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE), or Taiex, ended down 31.58 points, or 0.28 percent, at 11,239.67, after moving between 11,209.10 and 11,281.12, on turnover of NT$139.35 billion (US$4.55 billion).

The market opened down 5.07 points on a mild correction from a session earlier, when the Taiex closed up 0.78 percent, as investors were moved by the downturn on U.S. markets, where the Dow Jones Industrial Average ended down 0.15 percent and the tech-heavy Nasdaq index ended down 0.72 percent overnight, the dealers said.

The main board regained its footing in the early morning session before selling re-emerged, focusing on TSMC, which pushed down the broader market into negative territory again, and with old economy and financial stocks largely moving in the red, the Taiex ended below the previous closing level, they said.

"A weaker TSMC dictated the broader market today," Ta Chan Securities Investment Consulting analyst Jerry Chen said. "Using the weakness of the U.S. markets as an excuse, investors here locked in their earlier gains built on the healthy fundamentals of the stock."

TSMC got a boost from optimism toward its lead in technology over its peers, which is expected to maintain the company's status as the world's largest contract chipmaker, the dealers said.

In an investor conference held a week earlier, TSMC said its consolidated sales for the fourth quarter should range between US$10.2 billion and US$10.3 billion, with a sales forecast 9 percent higher than in the third quarter, when its net profit hit a record NT$101.07 billion, up 51.4 percent from the previous quarter.

TSMC's losses contributed to a roughly 10-point decline on the Taiex.

"The silver lining was that investors who were sitting on large amounts of cash still looked for targets for their money, and today, they moved their funds into other tech stocks, in particular Hon Hai, to offset the impact resulting from TSMC's losses," Chen said.

Hon Hai, the world's largest contract electronics maker, gained 1.26 percent to close at NT$80.50. Pegatron Corp., a smaller iPhone assembler, rose 1.20 percent to end at NT$59.20 and notebook computer OMD service provider Quanta Computer Inc. added 0.34 percent to close at NT$58.20.

The dealers said the U.S. markets' retreat also moved local non-tech stocks throughout the session.

Among the falling old economy stocks, food brand Uni-President Enterprises Corp. fell 1.89 percent to close at NT$72.80, Taiwan Cement Corp. lost 1.09 percent to end at NT$40.95, Formosa Plastics Corp. dropped 1.03 percent to close at NT$95.80, and textile maker Far Eastern New Century Corp. fell 0.68 percent to end at NT$29.40.

In the financial sector, which closed down 0.67 percent, Cathay Financial Holding Co. lost 1.33 percent to close at NT$40.95 and Fubon Financial Holding Co. dropped 0.66 percent to end at NT$45.20, while Mega Financial Holding Co. rose 0.17 percent to close at NT$29.20.

"Despite the fall in the index, the downward pressure was not intolerable at all today, as the local equity market remained awash in liquidity," Chen said. "Due to a stronger Taiwan dollar, foreign investors still moved their funds into the local market."

According to the TWSE, foreign institutional investors bought a net NT$5.01 billion-worth of shares on the main board Wednesday after a net buy of NT$13.82 billion the previous day.

"Moreover, at a time of eased concerns over trade friction between the United States and China, it is possible that the Taiex will see the nearest technical support level at 11,188 points," Chen said.

U.S. President Donald Trump had an upbeat tone overnight, saying he expects Washington and Beijing to ink an agreement by the middle of next month after the first stage of trade talks wrapped up earlier this month.

Source: Focus Taiwan News Channel