TAIEX ends below 7,700 as Apple suppliers fall
January 25, 2013, 12:44 pm TWN
TAIPEI -- Shares in Taiwan trended lower to close below the 7,700-point mark Thursday as many local suppliers to Apple Inc. came under pressure after the U.S. high-tech giant gave a cautious sales outlook for the current quarter, dealers said.
Turnover remained moderate, leaving the index to fluctuate in a narrow range, as investors stayed on the sidelines waiting for other high-tech heavyweights, including Microsoft Corp., to release their quarterly results, the dealers said.
In addition to U.S. corporate earnings concerns, investors here appeared wary of the ongoing earnings season in the local market, making them reluctant to trade for the moment, they added.
The weighted index closed down 48.19 points, or 0.62 percent, at 7,695.99, after moving between 7,653.62 and 7,724.68, on turnover of NT$73.19 billion (US$2.52 billion).
The market opened down 0.35 percent and fell further to the day's low as traders took cues from Apple's disappointing results for last quarter and lower-than-expected sales forecast for the current quarter, the dealers said.
After the index moved to the nearest technical support level at around 7,600 points, bargain hunting emerged with investors picking up select "Apple concept stocks," which appeared attractive in valuations, to prevent the broader market from further losses at the end of the session, they said.
"Apple's results dictated the market movement throughout the session, as many investors feared that weakening sales and profitability will impact Taiwanese suppliers' bottom lines," President Securities analyst Vickie Hsieh said.
After Wall Street closed, Apple issued its expectations that revenue for the quarter to March will range between US$41 billion and US$43 billion, lower than an earlier market estimate of US$45.5 billion.
Its gross margin for the first quarter could range between 37.5 percent and 38.5 percent, compared with 38.6 percent recorded in the previous quarter.
Hon Hai Precision Industry Co., which assembles iPhones and iPads for Apple, suffered heavier selling, down 2.94 percent to close at NT$82.50, with 87.60 million shares changing hands.
Cellphone camera lens supplier Largan Precision rose 2.04 percent to close at NT$750.00, off an early low of NT$705.00, while flexible printed circuit board maker Flexium Interconnect Inc. ended down 0.41 percent at NT$97.20, representing a recovery from an even lower NT$94.50.
Led by the losses posted by Apple suppliers, the electronics sector was down 0.64 percent, while the foodstuff sector outperformed the broader market, finishing up 0.35 percent.