Local market retreats amid worries over Fed policy
CNATAIPEI -- Shares in Taiwan pulled back Friday, ending a four-session high streak and reflecting losses posted on Wall Street overnight as investors remained wary of what the U.S. Federal Reserve will do next about its monetary policy, dealers said.
September 14, 2013, 12:01 am TWN
Stock in the old economy faced downward pressure as investors rushed to pocket the gains they had built in the past few sessions amid uncertainty over global market movements ahead of the Fed's policymaking meeting scheduled for next week, they said.
The bellwether electronics sector also continued a downtrend as “Apple concept stock” — suppliers to U.S.-based Apple Inc. — remained weak following a lackluster reception to that company's new iPhone models, they said.
The weighted index closed down 57.16 points, or 0.69 percent, at 8,168.20, after moving between 8,162.14 and 8,228.67, on turnover of NT$64.76 billion (US$2.18 billion).
The market opened down 0.18-percent in a knee-jerk reaction to a falling Wall Street overnight, and selling escalated as high-tech stocks fell further on a failure of local manufacturers in the Apple supply chain to stage a rebound, dealers said.
Selling also spread to traditional industrial stocks, in particular in food and plastics sectors, to send the index even lower at the end of the session, they said.
“Judging from the weakness in most of the regional markets today, Wall Street's movement still dictated investor sentiment worldwide,” Grand Fortune Securities analyst Chen Wei-tai said.
“Investors at home and in the other markets in the region preferred to cut positions for the moment in an attempt to avoid losses caused by the Fed's possible monetary tightening,” Chen said.
The market has widely expected that the U.S. central bank will decide to scale back its monthly US$85 billion bond buying in the next policymaking meeting. However, investors are still watching closely for how the Fed will approach it.
Chen said although the local market posted small gains in the past four sessions, the market still stayed in consolidation mode, failing to make a breakthrough.
“Today, many investors lost their patience and were reluctant to keep their holdings. Simply seizing the weakness of Wall Street and other regional markets, they shifted to the sell side,” Chen said.
Chen said investors are also keeping a close eye on presales of Apple's new gadgets — the flagship iPhone 5S and the lower-cost iPhone 5C — in certain markets, which will start later in the day, for a clue about how the new products will be received.
Among the Apple local suppliers, smartphone camera vendor Largan Precision Co. fell 0.21 percent to close at NT$942.00, and Pegatron Corp., which assembles iPhone for Apple, lost 1.44 percent to end at NT$41.15.
Taiwan Semiconductor Manufacturing Co. which many suspect is providing chips for the new iPhones, fell 0.97 percent to close at NT$201.50.
Hon Hai Precision Industry Co., which assembles iPhones and iPads, appeared resilient, up 0.27 percent to close at NT$75.00.
In the old economy sector, Nan Ya Plastics Corp. fell 2.22 percent to close at NT$61.80, and food product maker Uni-President Enterprises Corp. shed 2.92 percent to end at NT$56.50.
“I expect turnover in the local market will continue to shrink tomorrow amid lingering concerns over the Fed's policy,” Chen said.
The local stock market will open Saturday to make up for lost trading sessions during next week's Mid-Autumn Festival holiday.