TAIEX be­low 8,000 points; Me­di­aTek hit by price war

The China Post - - TAIWAN BUSINESS -

Tai­wan shares fell be­low the 8,000 point mark Thurs­day morn­ing amid cau­tious sen­ti­ment to­ward the mar­ket’s fu­ture move­ments af­ter a re­cent sell-off caused by con­cerns over the lo­cal eco­nomic fun­da­men­tals, deal­ers said.

Among the fall­ing stocks, shares of in­te­grated cir­cuit maker Me­di­aTek Inc. (

) was ham­mered by re­ports which said that price com­pe­ti­tion in the China mar­ket has been es­ca­lat­ing, which raised wor­ries over the Tai­wanese firm’s profit mar­gin due to weak­en­ing pric­ing power, they said.

As of 10:52 a.m., the weighted in­dex on the Tai­wan Stock Ex­change had fallen 0.33 per­cent to 7,995.18 points on turnover of NT$45.89 bil­lion (US$1.42 bil­lion). Shares of Me­di­aTek had lost 1.53 per­cent to NT$257.00 with 8.50 mil­lion shares chang­ing hands.

The lo­cal main board opened lower to fall be­low 8,000 points in the wake of the losses in­curred on Wall Street overnight be­fore some bar­gain hunt­ing emerged to push the in­dex back up to that level at one point, deal­ers said. But, selling reemerged soon to send lo­cal shares be­low 8,000 points again, they said.

“Fol­low­ing the re­cent steep down­turn, the lo­cal eq­uity mar­ket has be­come tech­ni­cally frag­ile and in­vestor con­fi­dence has been eroded,” MasterLink Se­cu­ri­ties an­a­lyst Tom Tang said. “Even though the in­dex had staged a mild re­bound, a down­trend re­mained in­tact.”

Tang said that bar­gain hunt­ing seen dur­ing the Thurs­day ses­sion could come from gov­ern­ment-led funds in a bid to help the in­dex re­turn to the 8,000 point level, but the ef­forts failed. “The mar­ket can­not rely on buy­ing from the gov­ern­ment-led funds only. Un­less in­vestor con­fi­dence is re­stored, the mar­ket is likely to in­cur more losses.”

Since April 27, when the weighted in­dex on the main board hit a 2015 high of 9,973.12 points, the lo­cal mar­ket has fallen al­most 2,000 points or more than 19 per­cent as of Wed­nes­day. On Wed­nes­day alone, the in­dex lost 1.9 per­cent.

Global De­mand on the De­cline

“In­vestors have turned down­beat about the lo­cal econ­omy. There are ris­ing fears that with global de­mand on the de­cline, Tai­wan’s econ­omy could grow at a pace of less than 1 per­cent for 2015, lower than the gov­ern­ment’s es­ti­mate,” Tang said. Last week, the gov­ern­ment trimmed its forecast for Tai­wan’s 2015 eco­nomic growth to 1.56 per­cent from an ear­lier es­ti­mate of a 3.28 per­cent made in May.

“Haunted by a gloomy at­ti­tude to­ward the econ­omy, it is pos­si­ble for the in­dex to fall fur­ther to test the next tech­ni­cal sup­port at around 7,800 points,” Tang said.

IC De­signer Price Cut

Among the fall­ing large-cap stocks, shares of Me­di­aTek en­coun­tered selling af­ter the lo­cal media re­ported Thurs­day that the Tai­wanese IC de­signer has staged a price cut for its smart­phone chips in China to gain a larger share of the main­land mar­ket. In China, de­mand for smart­phones has been weak­en­ing.

“Such price cut re­ports did not sur­prise me at all. Me­di­aTek is faced with fierce com­pe­ti­tion not only from U.S.-based ri­val Qual­comm Inc. but also from its Chi­nese com­peti­tor,” Tang said, re­fer­ring to China’s Spread­trum Com­mu­ni­ca­tions Inc.

The re­ports said that prices of Me­di­aTek’s smart­phone chips could fall 5-10 per­cent in the third quar­ter, a steeper fall than an ear­lier mar­ket es­ti­mate of 3 per­cent.

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