Taipei-Shares in Taiwan closed moderately lower Thursday, although bargain hunting emerged after the main board fell closer to the 12,000-point level, dealers said.
The bellwether electronics sector led the downturn, as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) came under pressure amid worry that the United States will increase its business sanctions against one of TSMC's major clients, Chinese telecom equipment giant Huawei Technologies Inc., dealers said.
The weighted index on the Taiwan Stock Exchange (Taiex), ended down 24.95 points, or 0.21 percent, at 12,066.93, after moving between 12,006.08 and 12,075.54. Turnover totaled NT$138.66 billion (US$4.63 billion) during the session.
The market opened down 0.71 percent on follow through selling from the previous session, when the Taiex ended 0.72 percent lower.
As the Taiex dropped closer to 12,000 points, however, some investors shifted to the buy side, picking up bargains, which held to a moderate downturn on the main board by the end of the session, dealers said.
The market was bothered by media reports that the U.S. government was about to extend its ban on the sale of American components to Huawei, although Washington and Beijing signed a phase-one trade deal Wednesday, dealers said.
Since the Huawei issue was not included in the trade agreement, TSMC shares were hurt by worry about the impact on the Taiwanese company, dealers said.
"It was a shock to many investors, who unloaded their holdings in TSMC, as Huawei accounts for about 10 percent of TSMC's total sales," equity market analyst Andy Hsu said. "Despite the signing of the phase-one trade agreement between the world's two top economies, their trade frictions remain."
TSMC, the most heavily weighted stock on the local market, fell 1.62 percent to close at NT$334.50, after dropping to an early low of NT$330.00, with 55.13 million shares changing hands.
The electronics sector closed down 0.41 percent at 531.22, after a low of 526.81.
Other large cap stocks also benefitted from the late bargain hunting, including iPhone assembler Hon Hai Precision Industry Co., which rose 0.11 percent to close at NT$90.00, after hitting a low of NT$89.40.
Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., rose 0.60 percent to NT$5,015.00, off a low of NT$4,895.00, and integrated circuit designer MediaTek Inc. gained 1.20 percent to close at NT$421.00 off a low of NT$415.00.
"While the high tech sector dropped, investors were parking their money in select large-cap old economy and financial stocks, which helped prop up the broader market," Hsu said.
Among the gaining big old economy stocks, Nan Ya Plastics Corp. rose 0.28 percent to close at NT$72.90, Taiwan Cement Corp. added 0.45 percent to end at NT$44.75, and food brand Uni-President Enterprises Corp. grew 1.21 percent to close at NT$75.50.
Certain stocks with big property assets also attracted strong buying, including Kuoyang Construction Co., which soared 8.61 percent to end at NT$21.45.
In the financial sector, which closed up 0.10 percent on rotational buying, Cathay Financial Holding Co. rose 0.12 percent to end at NT$42.95, Fubon Financial Holding Co. gained 0.21 percent to close at NT$46.90, and Mega Financial Holding Co. finished 0.47 percent higher at NT$31.95.
"Today, the Taiex fell below the nearest technical support -- the 5-day moving average of 12,095," Hsu said. "It is worth watching whether it will be able to rebound to hold above that level soon."
However, he said, more selling can be expected over the next few trading sessions leading up to the long Lunar New Year holiday as many investors will want to pocket their gains and keep more cash on hand. The last trading session before the holiday is Jan. 20.
According to Taiex data, foreign institutional investors sold a net NT$4.52 billion worth of shares on the main board Thursday after a net sell of NT$8.90 billion on Wednesday.
Source: Focus Taiwan News Channel