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Local market retreats on Wall Street tumble

TAIPEI--Shares in Taiwan ended lower Thursday in the wake of a falling Wall Street overnight amid fears that the U.S. Federal Reserve will raise interest rates sooner than the market had expected, dealers said.

The bellwether electronics sector followed the tech-heavy NASDAQ index to fall with large cap stocks encountering heavy selling, while old economy stocks, particularly firms with close business ties with China, also faced selling on Beijing's slower manufacturing activity, they said.

The weighted index of the Taiwan Stock Exchange close down 52.39 points or 0.61 percent at 8,524.62 after moving between 8,513.08 and 8,567.19 on turnover of NT$94.51 billion (US$3.12 billion).

The market opened down 0.25 percent in a knee-jerk reaction to the losses incurred in the U.S. market as electronics heavyweights, including Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電), faced pressure, dealers said.

Selling spread to the old economy sector as “China concept stocks” trended lower, dragging down the index further as the latest manufacturing activity data from China left investors disappointed, they said.

“Since trading of the local market resumed Feb. 5 after the Lunar New Year holiday, the index gained more than 300 points prior to today,” Concord Securities analyst Kerry Huang said.

“Investors here simply seized the fresh negative leads from the Fed to pocket their earlier gains,” Huang said.

The Fed released overnight the minutes of its policymaking meeting that wrapped in late January, indicating that the U.S. central bank is considering hiking interest rates sooner than the market had anticipated on an improving economy.

US Rate Hike Cycle Unlikely to Kick Off until 2015

“Judging from the latest disappointing housing start data in the U.S. and the manufacturing index in New York, the Fed is unlikely to kick off a rate hike cycle until 2015,” Huang said. “It is too early to worry about rate hikes for the moment.”

In the electronics sector, TSMC, the most heavily weighted stock in the local market, fell 1.39 percent to close at NT$106.50, while Hon Hai Precision Industry Co. (鴻海精密), which assembles iPhones and iPads for Apple Inc., shed 1.43 percent to end at NT$82.80.

Smartphone camera lens supplier Largan Precision Co. (大立光電) lost 0.43 percent to close at NT$1,165.00, while touch panel maker TPK Holding Co. (宸鴻) rose 0.83 percent to end at NT$182.00, even though it reported a net loss for the fourth quarter a day earlier.

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