Shares below 8,200 points as financials trend lower
Shares in Taiwan close below the 8,200 point mark Tuesday as the financial sector led the downturn of the broader market amid weak sentiment toward domestic economic growth, dealers said.
The bellwether electronics sector attracted buying on hopes that a weaker Taiwan dollar will boost the competitiveness of Taiwanese high- tech products in the global market, which helped the broader market fend off the effects of the weak financial sector, dealers said.
The weighted index on the Taiwan Stock Exchange closed down 36.20 points, or 0.44 percent, at 8,177.22, after moving between 8,166.77 and 8,277.22. Turnover totaled NT$ 74.49 billion during the session.
The market opened up 0.43 percent and rose to the day’s high on a technical rebound from a 1.11 percent slump in the previous session, dealers said. But as the index moved closer to the nearest technical resistance at around 8,300 points, investors shifted to the sell side, which pushed the index into the red by the close of the session, dealers said.
“Since the government cut its forecast last week for Taiwan’s 2015 economic growth to less than 2 percent, investor sentiment has become very fragile,” Marbo Securities Investment Consulting analyst Chang Chihcheng said.
The Directorate General of Budget, Accounting and Statistics on Friday cut its growth forecast for Taiwan’s 2015 gross domestic product ( GDP) to 1.56 percent, from an earlier estimate of 3.28 percent, citing slowing global demand.
“It was not surprising that investors rushed to pocket their earlier profits after today’s initials gains. The market has become very weak technically, with selling focused on the financial sector,” Chang said.
He said the thin trading volume on Tuesday indicated that many investors were reluctant to pick up value stocks.
Chang said he suspected that foreign institutional investors stood on the sell side of the financial sector after they had raised a large chunk of financial holdings in recent sessions. Tuesday’s downturn is likely to lead to further volatility among financial stocks, he said.
According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$ 129 mil- lion worth of shares on the main board Tuesday.
The financial sub- index closed down 2.28 percent. Among the falling financial stocks, Cathay Financial Holding Co. ( ) dropped 3.86 percent to end at NT$ 44.80, Fubon Financial Holding Co. ( ) lost 3.38 percent to close at NT$ 51.40, and CTCB Financial Holding Co. ( ) shed 2.82 percent to finish at NT$ 18.95.
“Fortunately, buying rotated to the export- oriented electronics sector, which helped prevent the broader market from falling further as the local central bank has engineered a depreciation of the Taiwan dollar against the U. S. dollar,” Chang said. “There is growing optimism that a falling Taiwan dollar will give electronics exporters a boost during the upcoming Christmas holiday season.”
Due to the central bank’s efforts to prop up the U.S. dollar, the Taiwan dollar had fallen 2.68 percent between Aug. 7 and Aug. 17.
On the back of the Taiwan dollar’s weakness, the electronics sector outperformed the broader market, rising 0.33 percent.
Among the gaining high- tech stocks, contract chip maker Taiwan Semiconductor Manufacturing Co. ( ) , the most heavily weighted stock on the local market, rose 1.61 percent to close at NT$ 126.00, and integrated circuit designer MediaTek Inc. (
) added 0.75 percent to end at NT$ 267.00.
“I think the local high- tech sector was oversold in recent sell- off. With the year- end shopping season approaching, the sector may remain relatively stable in the near future,” Chang said.
A man looks at the quotation board at a brokerage in Taipei, yesterday.