Taipei, Shares in Taiwan came under heavy pressure Tuesday, falling more than 100 points to close below the 11,000 point mark as large cap stocks, in particular those in the bellwether electronics sector, moved sharply lower, dealers said.
Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, led the downturn throughout the session amid worries over weakening global demand for tech gadgets, they said.
Market sentiment turned cautious amid concerns over a possible major pullback after recent gains, while many investors preferred to reduce their holdings ahead of September sales data due by Oct. 10, they added.
The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex closed down 132.17 points, or 1.20 percent, at 10,919.63, after moving between 10,906.42 and 11,064.34, on turnover of NT$105.87 billion (US$3.46 billion).
The market opened down 2.91 points and moved in a narrow range in the early morning session, but selling intensified after 9:30 a.m. with TSMC and other market heavyweights, including iPhone assembler Hon Hai Precision Industry Co., under considerable pressure, dealers said.
With local investors ignoring a rally on Wall Street, where the Dow Jones Industrial Average rose almost 200 points overnight, selling on the local main board spread to other large cap stocks in the non-tech sector to push the Taiex down further at the end of the session, they said.
"After the gains in recent sessions to push the Taiex closer to stiff technical resistance ahead of 11,100 points, it was time for the main board to make a correction," Concord Securities analyst Kerry Huang said.
"Although the local equity market suffered a slump it was the magnitude of the downturn that surprised me," Huang said. "As market heavyweights such as TSMC fell, the Taiex dropped below 11,000 points at the end of the session."
Shares in TSMC fell 2.09 percent to close at NT$257.50 with 38.37 million shares changing hands. The fall suffered by TSMC cost the Taiex about 55 points on Tuesday. "There is speculation that TSMC will cut its sales guidance for 2018 due to weaker than expected global demand, in particular buying from China," Huang said, referring to the chipmaker's investor conference scheduled for Oct. 18.
In mid-July, TSMC lowered its sales growth forecast for 2018 from an earlier estimate of 10 percent to 7-9 percent.
"More losses are possible for TSMC until the stock moves closer to the nearest technical support fat about NT$253-NT$255," Huang said.
Led by TSMC, the bellwether electronics sector closed down 1.46 percent and the semiconductor sub-index ended down 1.87 percent.
Among other falling tech large cap stocks, Hon Hai shed 2.25 percent to close at NT$78.10, integrated circuit designer MediaTek Inc. lost 2.00 percent to end at NT$245.00, and Catcher Technology Co., a metal casing supplier to Apple Inc., also fell 2.05 percent to close at NT$335.00.
Bucking the downturn, shares in Largan Precision Co., a smartphone camera lens supplier to Apple, gained 1.34 percent to end at NT$3,790.00.
"Despite a spike in international crude oil prices, weak market confidence still prompted investors to sell petrochemical stocks," Huang said.
Among the falling petrochemical stocks, Formosa Petrochemical Corp., second to TSMC in terms of market value, fell 1.01 to close at NT$147.00, Formosa Chemicals & Fibre Corp. lost 1.17 percent to end at NT$127.00, and Formosa Plastics Corp. shed 2.13 percent to close at NT$115.00.
"Rising trade friction between the United States and China continues to haunt investors," Huang said. "More important, investors were also cautious ahead of major firms releasing their September sales data by Oct. 10."
According to the TWSE, foreign institutional investors sold a net NT$12.27 billion worth of shares on the main board Tuesday.
Source: Focus Taiwan News Channel