Bourse falls on caution ahead of earnings data
CNA Friday, October 26, 2012, 12:03 am TWN
TAIPEI -- Cautious sentiment about corporate earnings dragged down shares on the Taiwan Stock Exchange yesterday ahead of third-quarter earnings reports by several high-tech heavyweights, dealers said.
Investors mostly stayed on the sidelines, which kept turnover low, as they nervously waited for sales guidance later in the day from large cap electronics firms such as Taiwan Semiconductor Manufacturing Co. (TSMC) and flat panel maker AU Optronics Corp. (AUO), dealers said.
The weighted index closed down 52.80 points, or 0.72 percent, at 7,262.08, after moving between 7,260.00 and 7,339.21. Turnover during the session was NT$61.06 billion.
The market opened up 0.20 percent and moved to the day's high on a technical rebound from the losses in the previous session, but profit taking emerged to reverse the early gains by the end of the session, dealers said.
Although government-led funds were believed to enter the market in a bid to prop up share prices during the session, concerns over the economic fundamentals remained a dominant factor in the market movement, dealers said.
"It seemed that many investors have lost confidence in the economy and they have no incentive to pick up stocks at the moment," Mega International Investment Service Corp. analyst Alex Huang said.
"Even though the government kept buying into stocks in the local bourse, fears over possible volatility in the global financial markets prevented investors from chasing prices and even prompted them to sell," Huang said.
Huang said the electronics sector remained one of the major victims of fragile market confidence.
TSMC fell 0.70 percent to close at NT$84.80 ahead of an investor conference at which the world's largest contract chip maker is expected to update its forecast for the global integrated circuit industry.
"While few investors expect disappointing TSMC third quarter results, many are worried about the outlook of the global IC sector," Huang said.
Among other losing high tech stocks, AUO dropped 3.90 percent to NT$11.10, and smartphone vendor HTC Corp. shed 5.88 percent to end at NT$248.00.
The old economy sector was also affected by economic uncertainty, with textile maker Far Eastern New Century Corp. down 1.75 percent at NT$30.80, and Huang Hsiang Construction Corp. falling 2.36 percent to NT$70.20.
"Since the index fell below the 7,400 point earlier this week, the market has become technically weak," Huang said. "The local bourse is likely to continue a downtrend in the near future."
At the end of the session, the construction sector had suffered the heaviest losses among the eight major sectors of the market, finishing down 1.5 percent. Textiles fell 1.4 percent, machinery and electronics lost 0.9 percent, and financial, and paper and pulp sectors closed down 0.7 percent.
Plastics and chemicals dropped 0.4 percent, while cement stocks rose 0.3 percent. The foodstuff sector ended unchanged.
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