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Wary investors keep local bourse rangebound

TAIPEI -- The local bourse moved in a narrow range yesterday amid lingering concerns over global demand, although the index closed in positive territory, dealers said.

A warning from Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chip maker, about possible inventory adjustments has made the market more wary of corporate earnings outlook, they said.

The reduced turnover indicated many investors preferred to stay on the sidelines, watching anxiously how companies in Taiwan and Wall Street will report their second quarter results and give guidance for the third quarter in the coming week, they added.

The weighted index closed up 16.11 points or 0.22 percent at the day's high of 7,164.68, off an early low of 7,130.71, on turnover of NT$46.22 billion (US$1.54 billion).

The market opened down 0.17 percent on a lackluster performance on Wall Street overnight and continued ranged trade throughout the trading session as worries over the world's economic fundamentals kept weighing on investors sentiment, dealers said.

"Look at the low turnover. The local bourse appeared very quiet with many investors on the sidelines," Grand Cathay Securities analyst Mars Hsu said. "They simply did not want to trade at the moment."

"The warning issued by TSMC, the market heavyweight, has raised concerns over demand and local high-tech exporters' bottom lines," Hsu said.

TSMC Chairman Morris Chang said Thursday that the global semiconductor sector is likely to encounter inventory adjustments in the fourth quarter of this year and in the first quarter of next year due to the weakness of the world's economic fundamentals.

Among the losing high-tech stocks, TSMC fell 1.03 percent to close at NT$76.70, contract notebook computer maker Pegatron shed 1.80 percent to end at NT$35.40, and PC vendor Acer closed down 2.17 percent at NT$27.00.

Hsu said while select electronics firms faced downward pressure, stocks in the old economy sector, in particular petrochemical goods suppliers, attracted rotational buying on the back of a recovery in product prices.

In the plastics and chemical sector, Formosa Plastics closed up 1.01 percent at NT$80.40 and Nan Ya Plastics ended up 0.91 percent at NT$55.40.

"Unless turnover expands significantly, it is unlikely for the local bourse to jump over strong technical hurdles at around 7,250 points any time soon," Hsu said.

At the end of the session, the plastics and chemical sector scored the highest gains among the eight major sectors of the market, finishing up 0.7 percent. Textile, financial and construction stocks rose 0.4 percent, and the cement sector closed up 0.3 percent.

Machinery and electronics stocks closed up 0.2 percent, while paper and pulp shares fell 0.2 percent, and the foodstuff sector ended unchanged.

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