TAIEX falls on Apple concept stocks concerns
CNA September 27, 2012, 11:22 am TWN
TAIPEI -- The local bourse pulled back yesterday as local high tech firms in the Apple supply chain encountered losses amid concerns over a supply shortage of the iPhone 5, dealers said.
In addition, lingering worries about economic fundamentals added downward pressure to the broader market to drag down the index below the 7,700-point mark by the end of the session, they said.
The weighted index closed down 64.50 points, or 0.83 percent, at 7,669.63, after moving between 7,649.50 and 7,708.90, on turnover of NT$84.22 billion.
The market opened down 0.41 percent as investors took cues from a fall on Wall Street after Federal Reserve Bank of Philadelphia President Charles Plosser said the Fed's third round of quantitative easing (QE3) is unlikely to stimulate the economy, the dealers said.
The downward trend of the market increased as investors rushed to dump their holdings in Apple concept stocks amid iPhone 5 supply concerns, as many investors were afraid that a lower-than-expected yield rate of the in-cell touch panel the newest iPhone uses will slow down shipments, they said.
"After the local bourse failed repeatedly to stand above 7,800 points in recent sessions, many investors here seem to have lost patience," Mega Securities analyst Alex Huang said.
"Investors simply seized the supply concerns over the iPhone 5 as a cause to cut their holdings for the moment, in particularly after witnessing Wall Street and even Apple shares falling overnight," Huang said.
The Dow Jones Industrial Average fell 0.8 percent to a two-week low overnight, while Apple shares shed 2.5 percent.
The fall in Apple shares raised worries over the supply of iPhone 5's in cell touch panels, a development that could drag down sales of Taiwanese firms in the supply chain of the U.S. high tech giant, the dealers said.
The in-cell screen technology, which is supplied by LG Display Co. and Japan Display Co., combines the display and touch sensor into one single device.
Hon Hai Precision Industry Co., which assembles iPhones and iPads for Apple, fell 3.53 percent to close at NT$90.20, while metal casing supplier Foxconn Technology Co. lost 3.45 percent to end at NT$112.00.
Largan Precision Co. a smartphone camera lens maker, shed 6.29 percent to close at NT$596.00 and flexible printed circuit board supplier Flexium Interconnect Inc. ended down 7 percent, the maximum daily decline, at NT$114.50.
"Fortunately, selling pressure on the broader market was not intolerably heavy at all as the index seemed to have some technical support after it moved closer to the 7,600 point during the session," Huang said.
Huang said investors should keep a close eye on the world economy, which he said is expected to continue to dictate global financial markets in the short term.
At the end of the session, the machinery and electronics sector suffered the heaviest selling among the eight major sectors of the market, finishing down 1.2 percent. Paper and pulp stocks lost 1.1 percent, and the cement and financial sectors closed down 0.7 percent.
Construction shares fell 0.5 percent, and plastics and chemicals, along with the textiles sector, lost 0.4 percent, while foodstuffs outperformed the broader market, closing up 0.5 percent.
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