Shares weaken ahead of Fed meeting conclusion
Shares in Taiwan extended losses Wednesday from a session earlier amid cautious sentiment before the U.S. Federal Reserve wraps up its two-day policymaking meeting later in the day, dealers said.
Selling pressure largely focused on old economy stocks as investors pocketed their gains seen in recent sessions, while the bellwether electronics sector appeared resilient, lending some support to the broader market, they said.
The weighted index on the Taiwan Stock Exchange closed down 22.95 points, or 0.24 percent, at 9,189.83, after moving between 9,170.09 and 9,242.22, on turnover of NT$91.60 billion (US$2.95 billion).
The market opened up 0.25 percent in the wake of the gains posted on Wall Street overnight, but remained in consolidation mode throughout the session with buying in large- cap, high- tech stocks offsetting selling in old economy stocks, dealers said.
“Before the Fed concludes the policymaking meeting later today, it was no surprise that the local equity market was dominated by caution to trade in a narrow range throughout the session,” Mega International Investment Services Corp. analyst Alex Huang said.
Concern on Fed’s Interest Rate
While the market has widely anticipated that the Fed will kick off an interest rate hike cycle in September at the earliest, “few wanted to take risks for the moment. Many investors simply cut their holdings,” Huang said.
The analyst said that as foreign institutional investors maintained a large number of net shortposition contracts in the futures market Tuesday, futures-driven selling served as the culprit for the latest market downturn Wednesday.
“The silver lining was that electronics heavyweights, in particular semiconductor stocks, managed themselves well above the previous close. Otherwise, the weighted index could have fallen further today,” Huang said.
The electronics sector closed up 0.29 percent, and the semiconductor sub-index ended up 0.49 percent.
Contract chip- maker Taiwan Semiconductor Manufacturing Co. ( ), the most heavily weighted stock in the local market, rose 0.35 percent to close at NT$142.50, and integrated circuit designer MediaTek Inc. (
) added 2.91 percent to end at NT$424.50.
Smartphone camera lens supplier Largan Precision Co. (
) gained 1.82 percent to close at NT$3,360,00 to remain the most expensive stock in Taiwan, while flat panel maker Innolux Corp. ( ) rose 3.72 percent to end at NT$16.75 on late session bargain hunting.
Among the losing old economy stocks, car vendor Yulon Motor Co. ( ) fell 2.31 percent to close at NT$36.00, Nan Ya Plastics Corp. ( ) lost 1.55 percent to end at NT$70.00, and food maker Uni-President Enterprises Corp. ( ) closed down 1.50 percent at NT$52.50.
“While keeping a close eye on the Fed’s meeting, investors should also remain alert over the debt problems in Greece, which could move the global financial markets,” Huang said. He said that the local index is expected to move between 9,100 points and 9,300 points in the near future.