Taiwan shares end down amid concerns over global volatility

Taiwan shares end down amid concerns over global volatility

Shares in Taiwan closed lower Wednesday as investors grew more concerned over possible further volatility in global markets, particularly after Wall Street took a beating and international oil prices plunged overnight, dealers said.

Selling focused on financial stocks amid fears that they will incur heavy losses resulting from their overseas investments at a time of instability in the world economy, while "Apple concept stocks" trended lower due to lingering worries over shipments of the new iPhones, they said.

Bucking the downturn on the broader market, Taiwan Semiconductor Manufacturing Co. (TSMC, the world's largest contract chip maker, posted significant gains to lend support to the weighted index, after the company announced a generous cash dividend proposal for 2015, they added.

The weighted index on the Taiwan Stock Exchange closed down 68.24 points, or 0.84 percent, at 8,063.00, after moving between 8,036.60 and 8,117.22, on turnover of NT$77.596 billion (US$2.3 billion).

The market opened down 0.17 percent on follow-through selling from a session earlier, and downward pressure escalated as investors took cues from the heavy losses on Wall Street, where the Dow Jones Industrial Average fell 1.80 percent, the tech-heavy NASDAQ index dropped 2.24 percent, and the S&P 500 index shed 1.87 percent after crude oil prices dove 5.5 percent overnight, dealers said.

Wednesday was the last trading session ahead of the upcoming Lunar New Year holiday, which will start on Feb. 6. It was only the fourth session in the past 20 years to record a loss right before the Lunar New Year holiday, according to the TWSE data. The three previous losing sessions were in 1996, 1998 and 2014.

"It was no surprise that the Taiwan market suffered a loss today due to the shock seen on Wall Street and the plunge in oil prices," Concord Securities analyst Kerry Huang said. "But, compared with other markets in the region, the local equity market seemed resilient."

"TSMC, the most heavily weighted stock in the local market, served as an anchor to stabilize the broader market as investors were impressed by its cash dividend proposal. Its American depositary receipts (ADRs) closed up overnight on the cash dividend lead, despite the decline on Wall Street," Huang said.

TSMC announced that it is planning to dole out a NT$6 cash dividend for 2015, sharply higher than the NT$4.5 dividend it issued for 2014, after the chip maker posted a record high in net profit last year. TSMC closed up 2.46 percent to close at NT$146.00 after a 0.45 percent increase in its ADRs overnight. Turnover posted by TSMC share transactions stood at NT$10.39 billion on the local main board Wednesday.

"The fat cash dividend proposal beat an earlier market expectation of NT$5-NT$5.5. It was no wonder that foreign institutional investors, which own more than 70 percent of TSMC's outstanding shares, rushed to buy the stock in the U.S. and Taiwan markets," Huang said.

However, other high tech stocks, particularly those in the Apple Inc. supply chain encountered pressure as foreign institutional investors stood on the sell side, dealers said. According to the TWSE, foreign institutional investors sold a net NT$1.65 billion worth of shares on the local main board Wednesday.

Among the Apple concept stocks, Hon Hai Precision Industry Co., an assembler of iPhones and iPads, fell 2.30 percent to close at NT$76.60, and metal casing maker Catcher Technology Co. shed 2.06 percent to end at NT$237.50. Largan Precision Co. closed unchanged at NT$2,350.00.

In the financial sector, which ended down 1.97 percent, Fubon Financial Holdings Co. lost 1.69 percent to close at NT$37.85, and Cathay Financial Holding Co. fell 3.24 percent to end at NT$35.80.

"Since the beginning of January, many investors have started to cut their holdings as they have feared that global markets will stay choppy during the Lunar New Year holiday, when the local market is closed," Huang said. "They have tended to raise their cash levels for the moment." (By Frances Huang)

Updated : 2021-02-26 10:03 GMT+08:00