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Local market down, financial sector up

TAIPEI--Shares in Taiwan trended lower Wednesday as a fall on Wall Street overnight led investors to pocket gains they had built in the bellwether electronics sector, dealers said.

The financial sector bucked the downtrend, however, led by Fubon Financial Holding Co. (富邦金控), which posted a more than 50 percent year-on-year increase in net profit for the first half of this year.

The weighted index on the Taiwan Stock Exchange closed down 41.00 points, or 0.43 percent, at 9,489.98, after moving between 9,478.76 and 9,522.99, on turnover of NT$100.18 billion (US$3.35 billion).

The market opened down 0.22 percent after the Dow Jones Industrial Average fell below the 17,000-point mark overnight amid renewed concerns that the U.S. Federal Reserve could start a rate-hike cycle in the third quarter of 2015, dealers said.

The index remained below the previous closing level throughout the session as buying focused on large-cap high-tech stocks, but gains in the financial sector kept the broader market from falling further at the close, they said.

Wall Steet Calling the Shots

“Wall Street's performance dictated the direction of the local market again, in particular after Goldman Sachs brought up the possibility that the Fed will raise interest rates in the third quarter of next year,” Mega International Investment Services Corp. analyst Alex Huang said.

“The local market has gained significantly in recent sessions, and investors here simply used the negative foreign factors to lock in their profits,” Huang said.

The local electronics sector was particularly hard hit after the tech-heavy Nasdaq index fell 1.35 percent overnight, Huang said.

Among the falling high-tech stocks, Taiwan Semiconductor Manufacturing Co. (TSMC,台積電), the most heavily weighted stock in the local market, fell 0.37 percent to close at NT$134.00, and integrated circuit designer MediaTek Inc. lost 0.57 percent to end at NT$519.00.

“I'm not particularly worried about these high-tech stocks as the losses were just technical in nature. With the second-half peak season approaching, these stocks could return to upswings,” Huang said.

The financial sector lent some support to the broader market amid optimism toward the sector's profitability after Fubon Financial reported its impressive first half results.

Fubon Financial closed up 2.76 percent at NT$44.65 after reporting that its net profit rose 53 percent from a year earlier to NT$27.32 billion in the first half of the year, while CTBC Financial Holding Co. gained 2.29 percent to end at NT$20.10.

“Despite the gains, the financial sector remains a market laggard. I expect the uptrend will continue, in particular because investors are encouraged by the sector's improving bottom line,” Huang said.

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