Local market finishes down to close trading at day's low 8,209.18
CNATAIPEI, Taiwan -- Shares in Taiwan closed lower Wednesday with large-cap stocks in focus amid caution about the outcome of a two-day policymaking meeting of the U.S. Federal Reserve, set to end later in the day, dealers said.
September 19, 2013, 12:25 am TWN
Led by heavyweights such as Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, the broader market extended its losses from a session earlier, the dealers said.
In addition to worries over the Fed's policy, many investors appeared reluctant to trade ahead of the upcoming 4-day Mid-Autumn Festival holiday that will start Thursday, as they feared global markets will be rocked during the holiday by a possible change in the Fed policy, they added.
The weighted index closed down 40.60 points, or 0.49 percent, at the day's low of 8,209.18, off an early high of 8,263.05, on turnover of NT$73.02 billion (US$2.46 billion).
The market opened down 1.6 points but went up to hit the day's high on a mild technical rebound. Profit taking immediately followed as many investors remained wary of the likelihood of the Fed announcing a scaling down of its massive bond-buying program, the dealers said.
The index fell to the red again at the end of the session as selling focused on liquid large-cap stocks, they said.
“Concerns over the next move by the Fed continued to dictate market sentiment,” Concord Securities analyst Kerry Huang said.
Huang said that as the market widely expects the U.S. central bank to cut its monthly fund injection by between US$10 billion and US$15 billion from the current US$85 billion, if the tapering-off exceeds the estimated range, it could be disaster for global markets.
“Many investors tended to stay on the sidelines before the Fed's meeting conclusion” Huang said. “As the Taiwan market will be closed Thursday and Friday for a national holiday, it was no surprise that investors here cut their holdings to avoid the impact of any losses in the international markets during the holiday.” Huang said that liquid market heavyweights such as TSMC and smartphone camera lens supplier Largan Precision Co. suffered heavier losses amid worries over a possible fund exodus in case of the Fed's liquidity tightening.
TSMC fell 2.37 percent to close at NT$103.00 and Largan lost 0.51 percent to end at NT$985.00, while Hon Hai Precision Industry Co., which assembles iPads and iPhones for Apple Inc. closed unchanged at NT$75.90.
In the old economy sector, food product maker Uni-President Enterprises Corp. fell 1.56 percent to close at NT$56.70, and Formosa Plastics Corp. ended down 1.16 percent at NT$76.60.
Bucking the downtrend, solar energy stocks Neo Solar Power Corp. rose 7 percent, the maximum daily increase, to close at NT$27.65 and Green Energy Technology Inc. gained 4.73 percent to end at NT$23.25 on solid demand from emerging markets.
Along with the Fed's policy, Huang said investors here should also keep a close eye on parliamentary elections in Germany scheduled for Sunday.
“As Germany is the largest economy in Europe, the results could influence the economic climate in the financially troubled region and impact global market sentiment,” he said.