Taiwan shares down in morning session; selling capped after dive

2017/05/18 12:33:42
Taiwan shares down in morning session; selling capped after dive

Taipei, May 18 (CNA) Taiwan shares moved lower in the morning session Thursday in the wake of a plunge on Wall Street overnight, but selling was capped, with the weighted index falling below the 9,900- point mark, dealers said.

The local main board got some support to trim earlier losses as investors took cues from other regional markets such as Hong Kong and Shanghai, which came off early lows after an initial shock from the U.S. market, the dealers said.

Select market heavyweights such as smartphone camera lens supplier Largan Precision Co. (大立光) and contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) recouped all or some of their earlier losses, preventing the broader market from falling further and helping the index return to 9,900 points, they added.

As of 11:43 a.m., the weighted index on the Taiwan Stock Exchange had fallen 50.20 points, or 0.56 percent to 9,957.47 after hitting a low of 9,895.65, on turnover of NT$55.42 billion (US$1.84 billion). The index fell sharply in the early morning session as investors were scared by a more-than 300 point drop in the Dow Jones Industrial Average.

The steep decline on Wall Street since U.S. President Donald Trump might face impeachment on reports that he asked former FBI Director James Comey to end an investigation into his former national security adviser Michael Flynn, which raised a question about Trump's interference, the dealers said.

"Now many investors have fears that Trump will face impeachment, sending Wall Street into a tailspin. It was no surprise that other global financial markets, like Taiwan, followed," Hua Nan Securities analyst Kevin Su said.

"Fortunately, the local main board seemed to have strong technical support after the weighted index fell below 9,900 points at one point today," Su said. "Other regional markets also recovered part of their losses, which gave a hint to investors here to hunt bargains, in particular large-cap stocks that have sound fundamentals."

Su said that the 9,900-point level neared the 20-day moving average of 9,895, triggering buying after the weighted index hit a low.

Among the market heavyweights that came off the early downturn, Largan Precison, which is a supplier to Apple Inc., added 1.87 percent to NT$4,910.00, off an early low of NT$4,755.00, while TSMC, which is believed to make the A11 processor for the next-generation iPhones, had lost 0.49 percent to NT$203.00 off an early low of NT$201.50 as of 11:43 a.m.

Dealers said that Largan and TSMC have benefitted from high hopes that Apple's new iPhones, which are scheduled to hit the market in the second half of this year, will strengthen their bottom lines for 2017.

"For TSMC, many foreign institutional investors have tended to hold onto the stock, since the firm has proposed to issue NT$7 in cash dividends per share for its 2016 earnings," Su said. Foreign institutional investors, who own an almost 80 percent stake in TSMC, are expected to receive about NT$145.2 billion.

(By Frances Huang)
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