Local bourse falls as high-tech sector hit by concerns of slow demand
CNA October 10, 2012, 12:30 am TWN
TAIPEI -- The local bourse extended its losses yesterday from an earlier session as the high-tech sector was hit by concerns over sluggish global demand resulting from continuing weakness in economic fundamentals, dealers said.
Smart phone vendor HTC Corp. pulled the electronics sector lower after the company reported lower-than-expected third quarter earnings, but certain financial stocks bucked the broader market's downswing due to their relatively low valuations, they said.
The weighted index closed down 23.88 points, or 0.31 percent, at 7,592.01, after moving between 7,590.75 and 7,631.96, on turnover of NT$80.56 billion.
The market opened down 0.29 percent on follow-through selling from a 0.97 percent fall a day earlier, and with the high-tech sector slumping, the benchmark weighted index remained in the red to the end of the session, dealers said.
"After yesterday's decline, the local bourse became technically weaker," Mega Securities analyst Alex Huang said.
"Under such unfavorable circumstances, investors tended to react to HTC's disappointing third quarter results by selling large cap electronics stocks due to lingering concerns over global demand," Huang said.
HTC tumbles 7 percent
HTC announced after the market closed Monday a third quarter net profit of NT$3.9 billion, or NT$4.7 per share, down from NT$7.4 billion, or NT$8.9 per share, in the previous quarter.
The results triggered heavy selling pressure, sending the stock down 7 percent, the maximum daily decline, to NT$267.
Among other losing high-tech stocks, Taiwan Semiconductor Manufacturing Co., the world's largest contract chip maker, shed 2.24 percent to end at NT$87.10, and Largan Precision Co., one of Apple's cell phone camera lens suppliers, closed down 1.63 percent at NT$602.
"Although Taiwan reported an increase in exports for September, it remains to be seen whether the growth trend will continue in the fourth quarter," Huang said. "Amid uncertainty over the market's outlook, investors tended to cut their holdings in high-tech stocks."
Taiwan did get some good news Monday when the government reported that Taiwan's exports in September hit a 14-month high of US$27.17 billion and rose year-on-year for the first time in seven months.
Electronics products exports were up 10.5 percent from a year earlier. But investors had doubts whether the new momentum could be sustained.
"Market sentiment toward the world's economic fundamentals remains fragile. It is likely to send the local bourse lower," Huang said.
"If the index fails to manage to stay above 7,550, further selling may follow," he said.
In trading Tuesday, the machinery and electronics sector suffered the heaviest losses among the eight major sectors of the market, finishing down 0.9 percent.
Paper and pulp stocks fell 0.5 percent, while the plastics and chemical, and construction sectors closed unchanged.
Other sectors performed better. Food shares rose 1.2 percent, cement stocks gained 0.7 percent, textile shares rose 0.3 percent, and financials closed up 0.2 percent.
In the financial sector, Fubon Financial Holding Co. gained 1.09 percent to end at NT$32.50 after it was confirmed that the company led domestic financial holding companies in net profit and earnings per share for the first nine months of the year.
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