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Taiwan shares end lower despite Wall Street strong gains

Taiwan shares end lower despite Wall Street strong gains

Taipei, Dec. 30 (CNA) Shares in Taiwan closed lower Wednesday, with investors shrugging off the triple-digit gains on Wall Street overnight since market sentiment was haunted by the weakness of the Chinese yuan, dealers said.

However, select market heavyweights, in particular Taiwan Semiconductor Manufacturing Co., bucked the downturn, lending some support to the broader market and preventing the index from falling further, the dealers said. Trading volume remained thin in a quiet session, since many foreign institutional investors were still away from the trading floor for the Christmas holiday, they added.

The weighted index on the Taiwan Stock Exchange closed down 13.92 points, or 0.17 percent, at 8,279.99, after moving between 8,262.52 and 8,342.34, on turnover of NT$53.25 billion (US$1.62 billion).

The market opened up 0.23 percent and rose to the day's high in a knee-jerk reaction to a 192.71 point, or 1.1 percent, increase on the Dow Jones Industrial Average overnight. But with the index moving closer to the nearest technical resistance level ahead of 8,400 points, selling set in to drag down the market into negative territory, and the weakness continued into the end of the session, the dealers said.

"Taiwan was not the only market in the region to ignore the strong showing on Wall Street overnight, as many investors were worried about the continued weakness of the yuan," Mega International Investment Services Corp. analyst Alex Huang said, referring to the losses incurred in the Hong Kong and Shanghai markets.

"The falling yuan prompted investors to raise fears over fund exoduses from the region, the last thing the equity markets in the region want to see," Huang said. On Wednesday, the yuan on the offshore market fell to a five-year low against the U.S. dollar at one point.

Fortunately, Huang said, the market did not suffer intolerable downward pressure as TSMC, the most heavily weighted stock in the local market, remained resilient, stabilizing the broader market. TSMC rose 0.4 percent to close at NT$142.50, while the electronics sub-index ended down 0.18 percent and the semiconductor sub-index ended down 0.03 percent.

"It is possible that government-led funds picked up stocks, like TSMC, in a bid to prevent the index from falling sharply at a time when the broader market came closer to the 8,400-point technical hurdle," Huang said. Among other high-tech stocks, Hon Hai Precision Industry Co., the world's largest contract electronics maker, gained 0.2 percent to close at NT$80.90, while integrated circuit packaging and testing services provider Advanced Semiconductor Engineering Inc. lost 2.0 percent to end at NT$37.15.

In the old economy sector, Formosa Plastics Corp. rose 0.8 percent to close at NT$73.50, while Taiwan Cement Corp. fell 1.6 percent to end at NT$27.20. The property sector closed up 2.35 percent after the government relaxed the rules governing mortgages.

"With many foreign investors away, we had another boring session, and this is expected to continue tomorrow, with the index likely to move in consolidation mode," Huang said. (By Frances Huang)