TaipeiShares in Taiwan closed lower Monday as investors here took cues from a plunge posted by high-tech stocks on Wall Street to send their Taiwanese counterparts lower throughout the session, dealers said.
Downward pressure emerged to push down the local bellwether electronics sector amid fears that U.S. high-tech heavyweights such as Apple Inc. and Google Inc. will face further downward pressure after a research report said that valuations of U.S.-listed tech stocks have been too high, the dealers said.
Sentiment remained cautious on the local main board ahead of a policymaking meeting scheduled by the U.S. Federal Reserve for June 13-14 at a time when the Fed is on a rate hike cycle, they added.
The weighted index on the Taiwan Stock Exchange ended down 89.69 points, or 0.88 percent, at the day's low of 10,109.96, off an early high of 10,158.64, on turnover of NT$89.49 billion (US$2.97 billion).
The market opened down 0.61 percent in a knee-jerk reaction to a 1.80 percent fall in the tech-heavy NASDAQ index and a 4.23 percent plunge in the Philadelphia Semiconductor Index on Wall Street on Friday after a Goldman Sachs research note said that the market has to stay alert over the already high valuations of U.S. tech stocks after a recent strong showing, the dealers said.
Taiwan's electronics sector came under pressure soon after the local main board opened, led by contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???), which is believed to make the A11 processor for the next-generation iPhones, and other Taiwanese suppliers to Apple, the dealers said.
Selling in the electronics sector continued into the end of the session, while the financial sector appeared resilient, lending some support to the broader market, they said.
"Taiwan's equity market is highly correlated to Wall Street, in particular to the U.S. high-tech sector. It was no surprise that caution dominated the local bourse after investors witnessed the latest sell-off among U.S. tech stocks," KGI Securities analyst Phil Chu said.
Apple fell 3.88 percent on Friday due to the Goldman Sachs report and a Bloomberg News report that said the next-generation iPhones, which are expected to be unveiled in September, will use modem chips with slower download speeds than some of its rival smartphones.
As a result, Apple concept stocks in Taiwan fell sharply, pushing down the electronics sector by 1.33 percent on Monday.
Among the falling Apple suppliers, TSMC, the most heavily weighted stock in the local equity market, shed 2.12 percent to close at NT$207.50, and Hon Hai Precision Industry Co. (??), an assembler of iPhones and iPads, lost 2.86 percent to end at NT$102.00.
Also among the Apple concept stocks, integrated circuit packaging and testing services provider Advanced Semiconductor Engineering Inc. (???) lost 2.22 percent to close at NT$37.40, and smartphone camera lens maker Largan Precision Co. (???) fell 0.72 percent to end at NT$37.40.
"We have to watch closely whether the NASDAQ index will rebound tonight," Chu said. "If so, the local electronics sector could follow suit, making the broader market technically healthier after the index fell below the technical support of the 10-day moving average of 10,161 points today."
Chu said the financial sector outperformed the broader market, up 0.36 percent, to keep the weighted index from falling further, as the sector was a market laggard.
In the financial sector, Fubon Financial Holding Co. (???) gained 0.44 percent to close at NT$46.00 and Cathay Financial Holding Co. (???) rose 1.92 percent to end at NT$47.70. The market has hopes that the two firms will come up with positive leads in their annual general meetings scheduled for June 16, Chu said.
He said the moderate turnover also reflected caution held by many investors before the Fed's policymaking meeting, although the market anticipates that the U.S. central bank will raise interest rates by 0.25 percentage points at that time.
Source: Focus Taiwan News Channel