Taiwan shares end lower on US volatility concerns
Taipei, May 3 (CNA) Stocks in Taiwan ended lower on Tuesday as investors remained cautious about the potential for additional volatility in U.S. markets ahead of a two-day U.S. Federal Reserve meeting starting later Tuesday, investors said. dealers.
The flagship electronics sector, and in particular the major pure-play wafer foundry operators, led the slowdown, while buying turned to some old-economy stocks, including in transportation sectors. and paper, supporting the broader market, dealers said.
The Taiex, the weighted index of the Taiwan Stock Exchange, ended down 93.28 points, or 0.56%, at 16,498.90, after trading between 16,465.99 and 16,604.87.
Revenue totaled 177.1 billion Taiwan dollars (5.99 billion US dollars), the lowest one-day total in nearly 18 months.
The Taiex opened 1.03 points and hit its highest level of the day at the start of Friday’s final trading session, when it rose 1.05%, dealers said. The market was closed Monday for the extended Labor Day holiday.
U.S. interest rate hike cycle
However, as the Taiex rose above the 16,600 mark, some investors began pocketing earlier gains, particularly in the tech sector, as the Fed feared the Fed would aggressively hike interest rates. directors and curbs interest in tech stocks, they said.
Although the tech-heavy Nasdaq index rebounded 1.63% overnight after falling 4.17% on Friday, “many investors were still worried about the possibility that higher rates interest is hurting tech stocks,” said Alex Huang, an analyst at Mega International Investment Services Corp.
“They were worried that after Monday’s rebound, the Nasdaq index would face volatility again,” Huang said.
The electronics sector fell 0.65% and the semiconductor sub-index fell 0.88% on Tuesday.
“The selloff was focused on large pure-play wafer foundry operators, which kept the electronics sector consolidating throughout the session,” Huang said. “Without TSMC (Taiwan Semiconductor Manufacturing Co.) getting stronger, it won’t be easy for Taiex to see a breakthrough.”
TSMC, the most weighted stock in the local market, fell 1.30% to close at NT$531.00, although its American certificates of deposit (ADR) rose 0.89% in US markets on the day on the next day.
United Microelectronics Corp., a small contract chipmaker, also fell 1.15% to end at NT$47.25 despite rising 2.26% in its ADRs on Monday.
Among IC designers, smartphone IC designer MediaTek Inc. fell 1.20% to close at NT$820.00 as the stock continued to see sales on concerns over lower the global demand for smartphones.
However, other IC designers resisted the slowdown. Among them, application-specific integrated circuit (ASIC) manufacturer Alchip Technologies Ltd. jumped 7.00% to close at NT$948.00 after the company reported better-than-expected first-quarter results.
Additionally, power management IC designer Silergy Corp. was boosted by strong bargain hunting, rising 4.24% to close at NT$2,830.00.
In the general electronics sector, iPhone assembler Hon Hai Precision Industry Co. rose 0.49% to close at NT$102.50, while power management solutions provider Delta Electronics Inc. lost 3.00% to close at NT$242.50.
“As the tech sector declined, some old economy stocks were boosted by spin buys, and paper stocks were just part of that,” Huang said.
The paper industry jumped 3.38% on higher commodity prices, Chung Hwa Pulp Corp. climbing 9.40% to close at NT420.95 and Baolong International Co. jumping 9.18% to close at NT$21.40.
“But investors should remain alert to rapid rotational buying in other commodity stocks, which could lead paper stocks to fall,” Huang said.
The transportation sector also outperformed the broader market on hopes that companies will report strong first-quarter results as cargo space remains tight around the world, he said.
In the transportation sector, which rose 0.37%, Evergreen Marine Corp., the largest containerized cargo shipper in Taiwan, rose 1.03% to close at NT$146.50, and rival Yang Ming Marine Transport Corp. added 0.40% to close at NT$126.50.
Wan Hai Lines Ltd. closed unchanged at NT$146.00.
“The market widely expected the Fed to raise interest rates by 50 basis points after the meeting,” Huang said. “In addition to the rate hike, what the Fed will say is very important in gaining clues about how aggressive it is going forward.”
Despite the fall in the Taiex, foreign institutional investors bought NT$441 million worth of shares in the market on Tuesday, according to the Taiwan Stock Exchange.