Shares in Taiwan moved lower Wednesday as selling focused on tech and financial stocks, forcing the broader market to give up its earlier gains by the end of the session, dealers said.

Market sentiment has turned cautious after a recent rally with increasing fears over a major pullback ahead of stiff technical resistance at around 15,000 points.

In addition, with the upcoming long Lunar New Year holiday approaching, many investors pocketed their profits and sought to keep as much cash as possible on hand, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 51.52 points, or 0.35 percent, at 14,751.44, after moving between 14,734.44 and 14,842,74. Turnover totaled NT$159.60 billion (US$5.24 billion).

The market opened up 0.13 percent and moved to the day’s high in the early morning session on follow-through buying from the previous session, when the Taiex rose 0.34 percent.

However, selling soon followed as investors locked in profits built for the bellwether electronics sector and financial sector, and the weakness continued until the end of the session, dealers said.

“After the Taiex saw gains at the beginning of this month, the main board moved closer to the nearest technical hurdle ahead of 15,000 points,” Moore Securities Investment Consulting Co. analyst Adam Lin said. Before Wednesday, the main board gained 665.27 points, or 4.71 percent in the first six trading sessions of this month.

“Concerns about a major technical correction have been growing since the upturn,” Lin said. “Moreover, the upcoming prolonged Lunar New Year holiday also prompted investors to take the money and run amid fears over uncertainties emerging in the global markets during that period.” Jan. 17 is the last trading session for the main board with trading resuming on Jan. 30.

Lin said the electronics and financial sectors fell victim to Wednesday’s profit taking.

The electronics sector fell 0.27 percent to close at 682.41 after coming off a high of 686.99, and the semiconductor sub-index lost 0.09 percent to end at 326.15, off a high of 327.91, with contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, dropping 0.31 percent to close at NT$484.50 after hitting a high of NT$488.00.

Lin said TSMC has seen stiff technical resistance ahead of NT$490.00.

“In addition to technical hurdles, the stock weakened after the chipmaker reported weaker than expected consolidated sales yesterday, which led many investors to turn wary ahead of an investor conference scheduled for Thursday, fearing the chipmaker will give negative leads.”

However, United Microelectronics Corp. and Powerchip Semiconductor Manufacturing Corp., two smaller contract chipmakers, bucked the downturn, rising 0.33 percent and 0.88 percent, respectively, to end at NT$45.15 and NT$34.30.

Among other semiconductor stocks, smartphone IC designer MediaTek Inc. rose 1.87 percent to close at NT$707.00, while IC packaging and testing services provide ASE Technology Holding Co. lost 0.99 percent to end at NT$100.50.

Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. lost 0.30 percent to close at NT$99.10, and contract notebook computer maker Quanta Computer Inc. dropped 0.54 percent to end at NT$73.60.

“Selling suffered by financial stocks was sparked by their squeezed profitability last year in the wake of large one-time COVID-19 pandemic insurance compensation payouts,” Lin said.

In the financial sector, which fell 0.80 percent, Fubon Financial Holding Co. lost 1.86 percent to close at NT$58.10, E. Sun Financial Holding Co. dropped 1.22 percent to end at NT$24.20, and Cathay Financial Holding Co. shed 0.72 percent to close at NT$41.40. However, Shanghai Commercial & Savings Bank rose 0.22 percent to end at NT$46.25.

Old economy stocks were clearly affected by profit taking with the petrochemical sector hit badly, falling 1.00 percent.

In the sector, Formosa Chemicals & Fibre lost 1.79 percent to close at NT$71.20, Formosa Petrochemical Corp. shed 1.69 percent to end at NT$81.20, Formosa Plastics Corp. dropped 1.12 percent to close at NT$87.90, and Nan Ya Plastics Corp. ended down 0.67 percent at NT$74.00 after the four companies reported an over 60 percent year-on-year plunge in combined net profit in 2022.

The transportation sector rose 0.15 percent, with shares in Evergreen Marine Corp., the largest container cargo shipper in Taiwan, rising 0.64 percent to close at NT$156.50, and bulk cargo shipper U-Ming Marine Transport Corp. gaining 1.17 percent to end at NT$47.75 on a technical rebound.

Elsewhere in the old economy sector, food brand Lian Hwa Foods Corp. rose 4.60 percent to close at NT$52.30, and cooking oil supplier TTET Union Corp. rose 1.75 percent to end at NT$145.00.

“Although foreign institutional investors have stood on the buy side in recent sessions, they have cut their number of long position contracts in the futures market for hedging purposes,” Lin said. “We need to pay close attention to their transactions.”

According to the TWSE, foreign institutional investors bought a net NT$3.54 billion worth of shares on the main board Wednesday.

Source: Focus Taiwan News Channel