Taipei, March 20 (CNA) Shares in Taiwan closed lower Wednesday with earlier gains eroded amid caution before the US Federal Reserve concludes its two-day policymaking meeting later in the day.
The Taiex, the Taiwan Stock Exchange’s (TWSE) weighted index, ended down 72.75 points, or 0.37 percent at 19,784.45 after moving between 19,728.43 and 19,994.42. Turnover totaled NT$520.10 billion (US$16.36 billion).
The market opened up 0.11 percent and soon rose to the day’s high, up about 137 points at one point, as the bellwether electronics sector led the uptrend in the wake of a 0.83 percent rise on the Dow Jones Industrial Average and a 0.39 percent increase on the tech-heavy Nasdaq index on the US markets overnight.
But with the Taiex moving closer to 20,000 points, selling emerged, taking a toll on large-cap semiconductor stocks as investors pocketed the gains built in recent sessions to push down the broader market to negative territory by the end of the session.
“Judging from today’s index fluctuations, I think technical hurdles ahead of the 20,000-point mark have been very high,” Mega International Investment Services Corp. analyst Alex Huang said.
“Many investors simply wanted to pocket their gains and keep cash on hand for the moment before the Fed’s meeting concludes. As a result, it was no surprise that the Taiex retreated from its earlier high despite the gains on the US markets,” Huang said .
He added that uncertainty over when the Fed will start a rate cut cycle and how it will do it bothered investors at home and abroad. “The latest gains on the US markets were just a technical rebound as consolidation mode continued amid the Fed worries.”
While the market had widely anticipated that the Fed will leave its key interest rates unchanged this time, the American central bank is expected to issue a dot plot, a chart updated quarterly that records each Fed official’s projection of interest rate movement. The dot plot could provide an indication it will do next with its monetary policy.
In the wake of a fall of 1.30 percent in its American depositary receipts overnight, Taiwan Semiconductor Manufacturing Co. (TSMC), the local market’s most heavily weighted stock, lost 0.52 percent to close at NT$758.00 after coming off a high of NT$769.00.
Led by TSMC, the electronics index fell 0.39 percent, falling back from its earlier upturn, with the semiconductor subindex down 0.61 percent.
“In addition to the Fed factors, today’s selling showed buying the constitutes in a new ETF raised by Yuanta Securities faded to some extent as investors shifted to the sell side, adding downward pressure on the main board,” Huang said.
Among the constituents of Yuanta Securities’ high dividend Exchange Traded Fund, code 00940, which will be listed on April 1, United Microelectronics Corp. (UMC), a smaller contract chipmaker, lost 0.19 percent to end at NT$52.90 Wednesday, reversing a 2.32 percent increase the previous day.
In addition, clean room equipment supplier United Integrated Services Co., another leading constituent of the Yuanta ETF, fell 0.24 percent to close at NT$413.00 after a 10 percent surge a day earlier.
Also in the tech sector, momentum for iPhone assembler Hon Hai Precision Industry Co. continued, with the stock rising 1.47 percent to end at NT$138.00.
Investors appear to be buoyed by Hon Hai’s recent announcement that it expects its artificial intelligence (AI) server sales to grow more than 40 percent this year.
However, other AI server makers came under pressure with Quanta Computer Inc. down 3.11 percent to close at NT$249.00 and Wistron Corp. down 2.04 percent to end at NT$120.00.
“Evergreen Marine Corp. was also affected by fading enthusiasm toward the Yuanta ETF’s constituents, sending the transportation sector lower,” Huang said.
Evergreen Marine, the largest container cargo shipper in Taiwan, which is the top constitute of the Yuanta ETF, lost 0.56 percent to close at NT$176.00 after soaring 7.60 percent a session earlier. Its rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. also fell 0.77 percent and 1.10 percent, respectively, to end at NT$44.95 and NT$45.00.
Elsewhere in the old economy sector, which appeared mixed, Formosa Plastics Corp. lost 1.47 percent to close at NT$66.80, and Nan Ya Plastics Corp. dropped 2.55 percent to end at NT$53.60.
Food brand Uni-President Enterprises Corp. gained 0.79 percent to close at NT$76.50. and cooking oil brand Great Wall Enterprise Co. rose 1.75 percent to end at NT$58.20.
In the financial sector, which lost 0.62 percent, Yuanta Financial Holding Co. shed 1.03 percent to close at NT$28.90, Cathay Financial Holding Co. lost 0.52 percent to end at NT$47.50, and Fubon Financial Holding Co. closed down 0.29 percent at NT $69.60.
“I think the Fed is likely to continue to keep the market guessing what a rate cut cycle will start after the meeting and uncertainty will remain,” Huang said. “So, further losses faced by the Taiex are possible until the nearest technical support at around 19,500 points.”
According to the TWSE, foreign institutional investors sold a net NT$26.98 billion worth of shares on the main board Wednesday.
(By Frances Huang)
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