Local bourse pulls back on profit-taking

Certain large-cap stocks in the electronics sector came under pressure amid uncertainty over near-term market prospects in the first quarter, the traditionally slow season for global high-tech businesses, they said.

The index managed, however, to right itself above the 7,800-point mark by the end of the session as the market remained awash in liquidity, they added.

The weighted index closed down 30.85 points, or 0.39 percent, at 7,805.99, after moving between 7,773.06 and 7,818.27, on turnover of NT$99.29 billion (US$3.42 billion).

The market opened down 0.24 percent and moved to the day's low after a pullback on Wall Street as high-tech heavyweights, such as handheld device camera lens supplier Largan Precision Co. and integrated circuit designer MediaTek Inc., came under pressure, dealers said.

After the index fell below 7,800 points, bargain hunters turned active looking for targets, which pushed the market back above that level by the end of the session, they said.

“The gains posted in the past two sessions largely resulted from the passage of a budget bill in the U.S. Congress to avert a 'fiscal cliff,'” Grand Cathay Securities analyst Mars Hsu said. “After the news was digested by the market, investors tended to pocket the profit.”

The U.S. House of Representatives passed the bill late Tuesday night U.S. time to avoid the fiscal cliff, which referred to sizable tax increases and spending cuts that would have kicked in beginning on Jan. 1 had no alternative measures been adopted.

Among the losing electronics stocks, Largan Precision fell 2.67 percent to close at NT$802.00, and MediaTek shed 6.29 percent to end at NT$305.50.

But Taiwan Semiconductor Manufacturing Co., the world's largest contract chip-maker, reversed its earlier losses on bargain hunting to close up 0.50 percent at NT$101.50.

“Investors remained wary of the slow-season effect of the first quarter for the global high-tech sector,” Hsu said.

“I expect the index will continue to move in a narrow range over the next few sessions before many major high-tech firms release their December sales figures next week, which will serve as market indicators,” he said.

While interest in large-cap stocks faded, small-sized firms, in particular solar energy product suppliers, outperformed the broader market, dealers said.

The buying emerged after billionaire investor Warren Buffet increased his investment in the solar energy sector in the United States, which lifted investor sentiment in Taiwan, they said.

In the solar energy sector, shares of both Sino-American Silicon Products Inc. and Motech Industries Inc. ended up by the daily maximum of 7 percent at NT$38.05 and NT$31.10, respectively.

The financial sector suffered the heaviest losses among the eight major sectors of the market, finishing down 0.9 percent. Machinery and electronics shares fell 0.6 percent, and textile stocks closed down 0.3 percent.

Bucking the downside of the broader market, plastics and chemical shares and construction stocks rose 0.6 percent and food shares gained 0.5 percent.

The cement sector and paper and pulp stocks closed unchanged.

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