Shares in Taiwan pulled back on Thursday with the weighted index falling below the 9,200 point mark again as investors responded to a fall of more than 100 points on the Dow Jones Industrial Average overnight, dealers said.
The financial sector led the downturn on the local main board, reflecting the selling of bank stocks in the U.S. market, while the bellwether local electronics sector also trended lower, pushing down the broader market with select large cap stocks the focus, they said.
The weighted index on the Taiwan Stock Exchange (TWSE) closed down 48.31 points, or 0.53 percent, at 9,153.09, after moving between 9,149.16 and 9,196.02, on turnover of NT$52.02 billion (US$1.61 billion).
The market opened down 0.32 percent in reaction to the losses on the Dow Jones Industrial Average, which fell 111.36 points or 0.56 percent on Thursday after the U.S. reported lower than expected pending home sales and worries over a major correction ahead of the 20,000 point mark, dealers said.
Selling on the local main board escalated after 1 p.m. and especially in the last 30 minutes of trading, on expanded turnover, dragging the broader market lower by the end of the session, they said.
"The 20,000 point mark on the Dow Jones exerts a psychological impact on investors on Wall Street so the index has repeatedly failed to reach that level and even fell back, like the retreat seen overnight," Mega International Investment Services analyst Alex Huang said. "It was no surprise that the local equity market followed suit and fell today."
"I suspect that foreign institutional investors shifted to the sell side in Taipei after the Dow Jones's fall, rushing to dump local large-cap stocks," Huang said.
According to the TWSE, foreign institutional investors sold a net NT$1.66 billion worth of shares on the main board on Thursday, after net buying of NT$3.44 billion on Wednesday, when the weighted index closed up 1.01 percent on turnover of NT$47.79 billion.
"Today's expanded turnover showed that selling increased in a down market, which could bode ill for future movements," Huang said.
The local financial sector closed down 0.80 percent as investors took their cue from the losses posted by U.S. financial firms overnight."Financial heavyweights, like Fubon Financial Holding Co. (???), gained significantly in recent sessions. Investors simply seized on a weaker Wall Street as a reason to lock in profit," Huang said.
Among the falling financial stocks, Fubon Financial fell 1.38 percent to close at NT$50.20 and shares in Cathay Financial Holding Co. (???) shed 1.54 percent to end at NT$47.90, while Mega Financial Holding Co. (???) lost 0.87 percent to close at NT$22.80.
In the bellwether electronics sector, which closed down 0.50 percent, shares in contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???), the most heavily weighted stock on the local market, fell 1.10 percent to the day's low of NT$180.00 with 30.20 million shares changing hands.
Also in the high-tech sector, shares in flat panel maker AU Optronics Corp. (??) lost 1.26 percent to close at NT$11.75, while Largan Precision Co. (???), a smartphone camera lens supplier to Apple Inc., ended unchanged at NT$3,725.00.
"I am worried about a weaker Taiwan dollar, which could lead more foreign investors to move their funds out of the country. A depletion of liquidity is the last thing equity investors want," Huang said.
The Taiwan dollar depreciated against the U.S. dollar on Thursday for the 11th consecutive session.
Source: Focus Taiwan News Channel