Eased Europe fears put bourse over 7,400 level
CNA September 8, 2012, 12:03 am TWN
TAIPEI -- The local bourse ended above the 7,400-point mark Friday amid eased concerns over the debt problems in the eurozone after the European Central Bank (ECB) announced a plan to acquire government bonds from debt-ridden countries, dealers said.
As the ECB bond-buying plan aims to lower borrowing costs in the debt-hit region, many investors seemed to be relieved, thinking that the financial situation in the eurozone will not deteriorate any time soon to further impact the world's fragile economy, they said.
Despite the upbeat mood toward the European financial situation, the gains posted by the local bourse were capped by stiff technical resistance as the market moved closer to 7,500 points, they added.
The weighted index closed up 98.19 points, or 1.34 percent, at 7,424.91, after moving between 7,409.88 and 7,446.10, on turnover of NT$86.46 billion (US$2.90 billion).
The market opened up 1.47 percent after investors took cues from rallies staged by Wall Street and the European markets overnight on the back of the ECB bond buying announcement, dealers said.
While buying boosted select large cap stocks in the high-tech sector on expectations that the launch of new electronics devices, such as tablet computers and ultrabook computers, will boost sales, technical hurdles ahead of 7,500 points prevented the index from gaining further by the end of the session, dealers said.
According to Hua Nan Securities, the electronics sector accounted for more than 70 percent of the local bourse's total turnover.
"After witnessing the solid gains on Wall Street and in the European markets, investors' appetite to take risks swelled," Hua Nan Securities analyst Henry Miao said. "So investors rushed to pick up high-tech stocks throughout the session."
Among the winning electronics stocks, Taiwan Semiconductor Manufacturing Co., the world's largest contract chip maker, rose 3.33 percent to close at NT$83.80, and flat panel supplier AU Optronics gained 5.57 percent to end at NT$10.05.
In a closely watched policymaking meeting Thursday, ECB President Mario Draghi unveiled a plan to buy government bonds with a duration of 1-3 years, saying there will be no "ex ante limits on the size" of the purchases.
"Although many investors have turned optimistic that the European debt problems will not worsen any time soon due to the ECB plan, it remains to be seen how and when the world's economy will get out of the current stagnation," Miao said.
"I expect the local bourse will fall into a consolidation mode for some time after the latest gains before jumping over the technical hurdles ahead," Miao said.
At the end of the session, the cement sector scored the highest gains among the eight largest sectors of the market, finishing up 3.1 percent. Machinery and electronics added 1.6 percent, paper and pulp stocks rose 1.4 percent, and the construction sector closed up 1.3 percent.
Financials and textiles rose 1.1 percent, plastics and chemicals added 1.0 percent, and the foodstuff sectors ended up 0.5 percent.
In the old economy sector, Asia Cement gained 4.27 percent to close at NT$35.40, and property developer KPT Industries ended up 7 percent, the maximum daily increase, at NT$16.75.
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