TSMC and Me­di­aTek shares fall amid pes­simistic out­look

The China Post - - LOCAL - BY JOHN LIU

As the in­dex of Tai­wan Stock Ex­change hit a 21-month low on Mon­day, shares of blue chips Tai­wan Semi­con­duc­tor Man­u­fac­tur­ing Co. (TSMC, ) and Me­di­aTek Inc. ( ) also fell to ex­cep­tional lows that have not been seen for a while.

TSMC was down 1.5 per­cent to fin­ish at NT$124, a record low since Oc­to­ber 2014. Me­di­aTek closed 1.8 per­cent lower at NT$265, the low­est level since July 2012.

For­eign in­vestors placed a net pur­chase of 1,710,000 TSMC stocks yesterday. In­vest­ment trust and se­cu­rity deal­ers, on the other hand, had a net sell of the stock. In the end, the three pro­fes­sional in­sti­tu­tional in­vestors reg­is­tered a net pur­chase of 1,265,000 shares.

For­eign in­vestors have con­fi­dence in Me­di­aTek as well, and reg­is­tered a net pur­chase of 99,000 shares. How­ever, in­vest­ment trust net sold Me­di­aTeck shares. All in all, the three in­sti­tu­tional in­vestors net sold 244,000 shares.

Rea­sons for TSMC’s Down­fall

TSMC’s share took a tum­ble de­spite the fact its July con­sol­i­dated rev­enues of NT$80.95 bil­lion rose 24.7 per­cent com­pared with the same pe­riod last year, and surged 35 per­cent from month.

Some sus­pect the share de­clined partly due to the gov­ern­ment’s de­ci­sion to sell off TSMC Amer­i­can de­pos­i­tory re­ceipts (ADRs) in an at­tempt to raise cash.

The fall of TSMC’s weight­ing by 0.06 per­cent – the largest down­ward ad­just­ment – in the MSCI Greater China In­dex is also be­lieved to wield ad­verse im­pact on its share price.

With pro­jected weaker de­mand and in­ven­tory ad­just­ment that may last un­til the end of the year, the mar­ket pre­dicted TSMC will ex­pe­ri­ence slower growth in the third quar­ter.

Me­di­aTek is likely to have the same faith. Low de­mand in the hand-held de­vice ap­pli­ca­tions and shrink­ing 3G phones in emerg­ing mar­kets cash a shadow on the com­pany’s rev­enue per­for­mance in the lat­ter half of 2015. Me­di­aTek pre­dicted mild growth in the third quar­ter.

On the pos­i­tive side, New Tai­wan dol­lar’s de­pre­ci­a­tion is ex­pected to ben­e­fit both TSMC and Me­di­aTek.

The U.S. dol­lar was traded at NT$32.621, mark­ing New Tai­wan dol­lar’s low­est value in around six years. Both of the two semi­con­duc­tor com­pa­nies’ rev­enues are ac­counted mainly in U.S. dol­lars.

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