[Taiwan shares end down amid tax concerns; TSMC bucks downturn] Shares in Taiwan continued to show weakness amid ongoing concerns over the possible impact of the government not extending its reduced transaction tax for day trading, dealers said Monday. Selling was seen almost across the board, in particular among old economy stocks, while the bellwether electronics sector fell but still outperformed the broader market, helped by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), dealers said. The Taiex, the Taiwan Stock Exchange’s (TWSE) benchmark weighted index, ended down 123.34 points, or 0.73 percent, at 16,858.77, after moving between 16,773.57 and 16,983.59. Turnover totalled NT$332.99 billion (US$11.95 billion). The market opened down 0.24 percent as investors shrugged off the all-time highs enjoyed by the Dow Jones Industrial Average and the S&P 500 index at the end of last week, dealers said. Selling then escalated as the transaction tax issue led many local investors who engage in day trading to cut their holdings. Bargain hunting emerged late in the session, however, to buy TSMC, helping the Taiex recoup some of its early losses, dealers added. “The transaction tax issue has created uncertainty in the market, which has seen heavy selling in recent sessions,” Concord Securities analyst Kerry Huang said. “There have been fears that the government will not extend the tax cut after the incentive expires at the end of this year.” To boost turnover, the government halved the transaction tax in 2017 to 0.15 percent for day trading, a practice which allows investors to buy and then sell the same stock or sell and then buy the same stock in a single session. Reports of government plans to discontinue the incentive first emerged last week, contributing to the Taiex’s fall of 544.17 points, or 3.1 percent, for the week. “Old economy stocks, in particular, were in the doldrums as they tend to be the favourites among day traders,” Huang said, referring to shipping stocks. “In addition some brokerages have tightened their lending rules on day trading to avoid losses at a time when volatility in some shipping stocks has led to an increase in defaults from investors,” Huang said. The transportation sector, in which many shipping stocks are traded, closed down 1.58 percent. Container cargo shipper Yang Ming Marine Transport Co. closed 5.26 percent lower at NT$126.00 (down 42 percent from a closing high of NT$216.50 on July 8), and bulk cargo shipper U-Ming Marine Transport Corp. ended down 3.92 percent at NT$58.80. But Evergreen Marine Corp., Taiwan’s largest container cargo shipper, closed unchanged at NT$130.50. Elsewhere in the old economy sector, Tung Ho Steel Enterprise Corp. lost 3.72 percent to close at NT$44.05, and China Steel Corp., the largest steel maker in Taiwan, lost 0.26 percent to end at NT$37.65. Huang said Monday’s reduced turnover, down from NT$386.64 billion on Friday, was evidence of investor caution. “Fortunately, TSMC stayed resilient, recovering its earlier losses to give some support to the broader market,” Huang said. “I suspect buying in the stock came from government-led funds in a bid to prevent the Taiex from falling further.” TSMC, the most heavily weighted stock in the local market, rose 0.52 percent to close at NT$584.00. TSMC’s gains also helped to stabilise the electronics sector, which ended down only 0.25 percent. Among other semiconductor stocks, United Microelectronics Corp., a smaller contract chipmaker, lost 0.87 percent to close at NT$57.10, and integrated circuit designer MediaTek Inc. fell 0.99 percent to end at NT$901.00. Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. dropped 1.38 percent to close at NT$107.50, and PC brand Acer Inc. shed 2.79 percent to end at NT$24.35. In the financial sector, which fell 1.43 percent, Cathay Financial Holding Co. lost 1.27 percent to close at NT$54.30, and Fubon Financial Holding Co. dropped 2.05 percent to end at NT$76.50. “The Taiex fell below the 120-day moving average of 16,953 points today, making the market weaker,” Huang said. “The tax issue is expected to keep bothering local investors as long as such uncertainty remains.” Despite the fall in the Taiex, foreign institutional investors bought a net NT$4.75 billion in shares Monday, according to the TWSE. https://focustaiwan.tw/business/202108160017