Local market ends below 9,600 points after TSMC plunges
Shares in Taiwan closed below the 9,600-point mark Friday as Taiwan Semiconductor Manufacturing Co. ( TSMC, ) took a beating after the world’s largest contract chip-maker gave a cautious second-quarter sales forecast, dealerssaid.
Led by TSMC, the semiconductor sector came under pressure and selling spread to other hightech stocks. The financial sector was unable to resist the overall bearish mood and also slid, dragging the market down further by the end of the session, they said.
Largan Precision Co. ( ), a smartphone camera lens supplier to Apple Inc., was one of the few high-tech stocks to buck the broader market’s downturn after it announced a higher than expected gross margin for the January-March period, they said.
The weighted index on the Taiwan Stock Exchange (TWSE) ended down 85.94 points, or 0.88 percent, at the day’s low of 9,570.93, off an early high of 9,615.52, on turnover of NT$ 97.70 billion( US$ 3.13 billion).
The market opened down 0.58 percent on heavy selling of TSMC shares as investors were unnerved by the worse-than-expected sales guidance for the second quarter TSMC gave at an investor conference on Thursday, dealers said.
Selling escalated to send the index to the day’s low at the close as caution over the integrated circuit sector and the entire electronics sector mounted amid fears that more negative leads will emerge as U.S.-listed companies report the earnings, they said.
TSMC’s Gloomy Forecast
“Investors were shocked by TSMC’s second quarter guidance. Many of them are afraid that TSMC’s gloomy forecast is just the beginning and that more negative news will follow from other high- tech firms during the U. S. earnings season,” analyst Eric Lai said.
“So they simply seized on the news to cut their holdings for the moment, which pushed down the index. I suspect that foreign institutional investors shifted to the sell side today,” Lai said.
According to the TWSE, foreign institutional investors sold a net NT$ 3.81 billion in shares on the main board Friday after a net purchase of NT$ 10.46 billion in shares Thursday.
TSMC shed 3.06 percent to close at NT$ 142.50, with 76.86 million shares changing hands, reflecting the disappointing sales forecast for the second quarter.
TSMC said Thursday it ex- pected its second- quarter consolidated sales to range between NT$ 204 billion and NT$ 207 billion, down 7- 8 percent from a quarter earlier and weaker than the market consensus forecast of a 5 percent decline.
Other Electronics Shares
Among other IC stocks, TSMC rival United Microelectronics Corp. ( ) fell 2.72 percent to close at NT$14.30, while IC packaging and testing services providers Advanced Semiconductor Engineering Inc. ( ) and Siliconware Precision Industries Co. ( ) closed down 0.92 percent at NT$42.90 and 1.88 percent at NT$49.65, respectively.
TSMC’s decision to cut its 2015 capital expenditure budget to US$ 10.5 billion- US$ 11 billion from US$ 11.5 billion- US$ 12 billion also hurt shares of semiconductor production equipment providers. Hermes Microvision Inc. (
), a l eading Taiwanbased semiconductor inspection tool and equipment supplier, shed 4.30 percent to close at NT$ 1,780.00 on the over- thecounter market.
Outperforming the broader market, Largan closed 0.90 percent higher at NT$ 2,810.00 after the company announced a first quarter gross margin of 56.7 percent, up about 6 percentage points from the previous quarter.
In the financial sector, Mega Financial Holding Co. (
) fell 0.76 percent to close at NT$ 26.20, and CTBC Financial Holding Co. ( ) lost 0.67 percent to end at NT$ 22.35.
“I expect more selling will follow because of the cautious sentiment, leading the index to test 9,500 points soon,” Lai said.