Taipei, Shares in Taiwan fell into consolidation mode Tuesday after soaring the day before amid eased concerns over trade tensions between the United States and China, dealers said.
The semiconductor sector appeared resilient as investors were encouraged by the gains posted by chip stocks in the U.S. market overnight, which helped offset the impact of selling in the local petrochemical sector and in other old economy stocks, dealers said.
The weighted index on the Taiwan Stock Exchange (Taiex) closed down 30.34 points, or 0.28 percent, at 10,865.12, after moving between 10,843.64 and 10,888.21. Turnover totaled NT$118.628 billion (US$3.83 billion) during the session.
The market opened down 0.16 percent as investors locked in their gains from Monday, when the Taiex closed up 1.53 percent after U.S. President Donald Trump and Chinese President Xi Jinping agreed in meeting at the G20 summit on weekend to hold off on new tariffs, dealers said.
However, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and other largecap semiconductor stocks bucked the downturn on the broader market Tuesday, after the Philadelphia Semiconductor Index in the U.S. market climbed 2.65 percent Monday, dealers said.
The strong showing by U.S. chip stocks followed Trump's decision to partially lift the ban on American companies selling products and services to Chinese telecom equipment supplier Huawei Technologies Inc., as part of his trade truce with Xi.
Concord Securities analyst Kerry Huang said the partial lifting of the ban against Huawei gave some support to certain chipmakers, which extended their momentum from a session earlier.
"Despite the eased concerns over the U.S.China trade disputes, however, I'm still cautious since there are few details about the lifting of the ban against Huawei," he said. "It is still unclear whether Google would allow the use on its Android operating system in Huawei's new smartphones."
He said that after the Taiex's rally on Monday, it was no surprise that the local main board took a breather on Tuesday.
"The consolidation is expected to pave the way for further gains down the road, as the local equity market continues its uptrend," Huang said, adding that the Taiex might challenge the technical resistance point at around 11,097.
"Large cap chip stocks such as TSMC remained resilient on the back of the gains posted by their U.S. counterparts overnight, which kept the broader market from falling further today," he said.
TSMC, the most heavily weighted stock on the local market, rose 0.20 percent to close at NT$249.00, with 24.15 million shares changing hands.
The buying in TSMC spread to other chip stocks, with integrated circuit designer MediaTek Inc. finishing 1.59 percent higher at NT$319.00.
Led by TSMC, the semiconductor subindex closed up 0.24 percent, while the bellwether electronics sector ended up 0.07 percent.
Among the tech stocks that fell due to profit taking, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., dropped 1.42 percent to close at NT$4,180.00, and iPhone assembler Hon Hai Precision Industry Co. lost 0.38 percent to end at NT$79.10.
In the petrochemical sector, Formosa Plastics Corp. shed 3.21 percent after the stock went exdividend in the day, Formosa Petrochemical Corp. fell 1.82 percent to end at NT$108.00, and Nan Ya Plastics Corp. lost 0.63 percent to close at NT$78.30.
"The selling in those major petrochemical stocks showed caution toward their business outlook amid a global economic slowdown," Huang said.
According to the TWSE, foreign institutional investors sold a net NT$4.99 billion worth of shares on the main board Tuesday after a net buy of NT$7.23 billion on Monday.
"Local investors are still watching whether foreign institutional investors will buy more Taiwanese equities, which could be critical to another takeoff of the main board," Huang said.
Source: Focus Taiwan News Channel