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Shares close below 8,800-point mark as tech shares dumped

TAIPEI--Shares in Taiwan closed below the 8,800-point mark Wednesday as investors rushed to dump high-tech stocks and pocket recently built gains, dealers said.

Electronics stocks, in particular high-priced ones led by smartphone camera lens supplier Largan Precision Co., trended lower, while large cap ones, such as Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電), also came under pressure, they said.

Market sentiment turned cautious before the U.S. Federal Reserve was to wrap up a two-day policymaking meeting later Wednesday. The meeting could offer more hints on when the Fed will raise key interest rates, dealers said.

Loss of 80.65 Points

The weighted index on the Taiwan Stock Exchange ended down 80.65 points, or 0.90 percent, at the day's low of 8,791.44, off an early high of 8,890.09, on turnover of NT$107.93 billion (US$3.57 billion).

The market opened up 0.15 percent and quickly rose to the day's high on gains posted on Wall Street overnight, but selling emerged as investors started to cut their electronics holdings, sensing that the sector's valuations were getting high, dealers said.

Old Economy Sectors Down

Downward pressure was also seen in old economy sectors, especially textile, financial and construction stocks, to push the index further lower at the close, they said.

“The technical rebounds seen in the previous two sessions were not that significant. So selling re-emerged today amid fears over further foreign institutional selling down the road,” Mega International Investment Services Corp. analyst Alex Huang said.

On Tuesday, foreign institutional investors were net sellers of NT$1.44 billion in local shares, ending a streak of 26 consecutive sessions in which they were net buyers in Taiwan's stock market. On Wednesday, foreign investors sold a net NT$3.01 billion in shares.

“That's why even though Wall Street posted gains, investors became cautious when they saw foreign investors dumping their shares again,” Huang said. “The local market has turned technically weaker after falling below 8,800 points.”

Electronics Sector

The bellwether electronics sector closed down 1.25 percent.

Largan (大立光) fell 2.84 percent to close at NT$1,885.00 following recent gains boosted by better-than-expected first quarter results, while TSMC, the most heavily weighted stock in the local market, shed 1.66 percent to end at NT$118.50.

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