Taipei, July 19 (CNA) Taiwan shares moved lower by more than 100 points Monday morning as large tech stocks came under pressure in the wake of losses incurred by their counterparts on the U.S. markets at the end of last week, dealers said.
With the bellwether electronics sector moving lower, buying rotated to select old economy stocks, in particular in the shipping and steel industries, which prevented the broader market from falling further, dealers said.
As of 10:47 a.m., the Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), had lost 132.67 points, or 0.74 percent, at 17,762.58 on turnover of NT$279.04 billion (US$9.97 billion).
The market opened down 0.23 percent and selling soon escalated with tech heavyweights, such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) in focus.
That pushed Taiex down further on the back of a 0.80 percent fall in the tech-heavy Nasdaq index Friday, while local shipping and steel stocks appeared resilient, dealers said.
As of 10:47 a.m., the electronics sector had lost 1.23 percent, with the semiconductor sub-index down 1.30 percent.
“Investors cut their holdings in the electronics sector today as they saw the Nasdaq index lost Friday,” Moore Rich Securities Consulting analyst Chang Chih-cheng said.
“TSMC led the downturn as selling continued from a session earlier with many investors disappointed with its earnings for the second quarter,” Chang said.
As of 10:47 a.m., TSMC had lost 1.36 percent to NT$581.00 with 28.76 million shares changing hands after its American depositary receipts fell 1.52 percent on the U.S. markets on Friday.
The stock started to suffer downward pressure Friday and selling continued on Monday after its investor conference held Thursday in which the world’s largest contract chipmaker reported its gross margin — the difference between revenue and cost of goods sold — fell 2.4 percentage points from a quarter earlier to 50 percent in the second quarter.
The lower gross margin was cited as one of the key factors for TSMC to report a 3.8 percent sequential fall in net profit to NT$134.36 billion in the second quarter.
“The lower gross margin reflected higher depreciation costs of its advanced 5 nanometer process in the second quarter,” Chang said. “Although TSMC could continue to see losses, I expect the stock will see strong technical support at around NT$571.00, the intraday low on March 24,” Chang said.
The 5nm process is the latest technology TSMC has launched mass production for since the second quarter of last year.
Among other tech stocks, United Microelectronics Corp., a smaller contract chipmaker, had lost 1.49 percent, falling to NT$52.90 per share, and smartphone IC designer MediaTek Inc. had dropped 3.76 percent to NT$921.00 as 10:47 a.m.
“The silver lining for the main board was that buying kept rotating to shipping and steel stocks amid optimism toward a cyclical recovery,” Chang said.
In the shipping industry, Evergreen Marine Corp had risen 5.60 percent to NT$188.50., Yang Ming Marine Transport Corp. had added 2.66 percent to NT$193.00, and Wan Hai Lines Ltd had gained 2.77 percent to NT$292.50 as of 10:47 a.m.
Among the gaining steel stocks, Tung Ho Steel Enterprise Corp. had added 1.41 percent to reach NT$50.20, and Kao Hsing Chang Iron & Steel Corp. had risen 5.75 percent to NT$25.75.
(By Tsai Peng-min and Frances Huang)