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Local market extends losses as electronics sector retreats

TAIPEI--Shares in Taiwan extended losses Monday from a session earlier as investors kept unloading their electronics stocks after the high-tech sector suffered a downturn on Wall Street at the end of last week, dealers said.

The weighted index of the Taiwan Stock Exchange closed down 19.11 points, or 0.2 percent, at 9,420.18, off an early low of 9,385.95 and 9,460.43, on turnover of NT$107.18 billion (US$3.57 billion).

Semiconductor Sector Down

Major semiconductor stocks, such as Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) and Siliconware Precision Industries Co. (矽品精密), trended lower as investors took cues from the almost 2-percent plunge in the Philadelphia Semiconductor Index in the U.S. market Friday, they said.

Solar energy stocks also took a dive after the U.S. Department of Commerce issued a preliminary decision to impose 27.59 percent to 44.18 percent in anti-dumping tariffs on Taiwan's energy cell and panel suppliers, dealers said.

In contrast, non-high tech stocks managed to remain resilient largely on their relatively low valuations, which lent some support to the broader market, they said.

The market opened down 0.25 percent in a knee-jerk reaction to weakness on Wall Street, and selling escalated particularly in the bellwether electronics sector as investors pocketed gains built in recent sessions, dealers said.

But the financial and old economy sectors served as an anchor to help the broader market stabilize to some extent and prevent the index from falling further at the close, they said.

“Selling in the electronics sector resulted from technical factors after a recent strong showing. The latest plunge on the Philadelphia Semiconductor Index simply triggered the downward pressure,” Asia Securities Investment Consultant analyst Chang Chih-cheng said.

IC Industry Fundamentals Strong

“But I have to say that as the global semiconductor sector is in the peak season of the third quarter, fundamentals of local integrated circuit stocks remained healthier,” Chang said.

TSMC, the world's largest contract electronics maker, fell 1.22 percent to end at NT$121.50, and IC packaging and testing services provider Siliconware shed 1.12 percent to close at NT$44.00.

Smartphone camera lens supplier Largan Precision Co. (大立光電) fell 1.96 percent to close at NT$2,255.00, and Hon Hai Precision Industry Co. (鴻海精密), the world's largest contract electronics maker, shed 2.78 percent to NT$105.00.

“It is possible for the electronics sector to suffer more selling as investors continue to lock in their gains. So, I suggest investors pay attention to old economy stocks, in particular 'China concept stocks' as the mainland's manufacturing activity has been improving,” Chang said.

Among the gaining old economy stocks which have close business ties with China, food product supplier Uni-President Enterprises Corp. (統一企業) gained 2.48 percent to close at NT$57.90, and Formosa Plastics Corp. (台灣塑膠) gained 0.91 percent to end at NT$77.70.

In the wake of a U.S.-imposed anti-dumping tariffs on Taiwan's solar cells and panel exports, Gintech Energy Corp. (昱晶能源) dropped 7 percent, the maximum daily decline, to close at NT$29.00, and Neo Solar Power Corp. (新日光能源) also shed 7 percent to end at NT$33.15.

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