Taipei-, Shares in Taiwan ended lower Friday on weakness in the bellwether electronics sector as investors dumped contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???) due to its cautious outlook for the first half of 2017, dealers said.
Selling also focused on the financial sector as investors reacted to losses suffered by U.S. financial stocks, in particular Goldman Sachs, they said.
The weighted index on the Taiwan Stock Exchange closed down 31.35 points, or 0.33 percent, at 9,378.83, after moving between 9,352.08 and 9,387.68, on turnover of NT$68.60 billion (US$2.17 billion).
The market opened down 0.39 percent as investors punished TSMC for its forecast at an investor conference on Thursday that its consolidated sales in the first quarter will fall 8.8-10 percent from the previous quarter, dealers said.
The company's guidance for the first quarter, the traditionally slow season for the semiconductor sector, lagged behind the market's expectation of a 5-8 percent sequential drop.
Sentiment toward TSMC also turned cautious after the world's largest contract chip maker said its second quarter sales would likely be affected by continued inventory adjustments among its clients and end up about the same as in the first quarter, dealers said.
The overall weakness on the exchange continued to the end of the session.
"A weaker TSMC sent the entire electronics sector as well as the broader market lower today," KGI Securities analyst Phil Chu.
"With the focus on TSMC's prospects for the first half of this year, investors shrugged off the company's announcement of record net income in the fourth quarter."
The electronics sector closed down 0.47 percent and the semiconductor sub-index ended 1.27 percent lower after TSMC, the most heavily weighted stock in the local market, lost 1.63 percent to close at NT$181.50, with 52.35 million shares changing hands.
TSMC's American depository receipts fell 2.92 percent on Wall Street overnight, even though the chip maker reported a fourth-quarter net profit of NT$100.20 billion, the highest quarterly profit in its history.
The figure was up 3.6 percent from the previous quarter and also up 37.6 percent from a year earlier.
"But the selling in TSMC was not overwhelming at all. I expect that the stock will see technical support at around NT$180.00 even if corrections continue," Chu said.
Also in the high-tech sector, Largan Precision Co. (???), a smartphone camera lens supplier to Apple Inc., closed unchanged at NT$4,240.00, off an early low of NT$4,175.00, to remain the most expensive stock in Taiwan.
The stock stayed below its previous close for most of the session despite reporting on Thursday a record NT$8.45 billion net profit for the fourth quarter and saying that its sales in January and February will rise year-on-year on solid demand.
"Investors just locked in gains they had built in the stock in recent sessions," Chu said.
In the financial sector, which closed down 0.52 percent, Fubon Financial Holding Co. (???) fell 1.72 percent to end at NT$51.30, and Cathay Financial Holding Co. (???) lost 0.62 percent to close at NT$48.40, while Mega Financial Holding Co. (???) ended unchanged at NT$23.90.
"Despite the index downturn, the silver lining was that turnover remained low, indicating that not many investors wanted to shift to the sell side at this time," Chu said.
"In particular, foreign institutional investors still held a large chunk of long-position contracts in the futures market."
According to the TWSE, foreign institutional investors bought a net NT$1.07 billion in shares on the main board Friday after a net buy of NT$10.39 billion in shares a session earlier.
"The weighted index could bounce back after moving closer to the nearest technical support at around 9,300 points as foreign funds continue to flow into the region," Chu said, referring to a stronger Taiwan dollar, which closed up NT$0.178 to close at NT$31.602 against the U.S. dollar Friday.
Source: Focus Taiwan News Channel