Local bourse finishes flat in thin trade as investors wait on reports

Many large-cap high-tech firms, such as Taiwan Semiconductor Manufacturing Co., and the world's largest contract electronics maker, Hon Hai Precision Industry Co., were unable to gain momentum amid concerns that a rising New Taiwan dollar will hurt the profitability of the sector, they said.

With the local market awash in liquidity, however, investors targeted small and mid-cap stocks, which helped the broader market manage to edge above the previous closing level, they said.

The weighted index closed up 7.51 points, or 0.09 percent, at 7,819.15, after moving between 7,801.69, and 7,845.36, on turnover of NT$76.08 billion (US$2.62 billion).

The market opened up 0.41 percent and moved to the day's high on follow-through buying, but profit-taking emerged to erase most of the gains by the end of the session, they said.

Since breaching 7,800 points on Thursday, the market has faced strong technical resistance, Concord Securities analyst Kerry Huang said.

“There are fears the market could suffer a major pullback soon, and many investors preferred to retreat from the trading floor, which dragged down daily turnover today,” Huang said.

“The reduced trading volume made it unlikely that the local market will jump over the technical hurdles ahead,” Huang said. “It was no surprise that the bourse fell into a consolidation mode.”

Huang said that because of the thin turnover, large-cap electronics stocks lacked the momentum to post the gains needed to push the broader market higher, even after Hon Hai Precision Industry posted record sales in 2012.

“Many investors have feared that the strength of the (New) Taiwan dollar will undermine the sector's global competitiveness,” Huang said. “In addition, as the first quarter is traditionally slow for the high-tech business, many investors wanted to stay away from the sector.”

Hon Hai Precision Industry closed unchanged at NT$88.60, while TSMC, the world's largest contract chip maker, also remained flat at NT$101.00.

Innolux Corp., Taiwan's largest flat panel maker, fell 3.83 percent to close at NT$15.05, while smartphone vendor HTC rose 0.73 percent to end at NT$277.00.

“The Wall Street earnings season has kicked off, and market sentiment at home and abroad has turned cautious, with many investors waiting for the results,” Huang said. “The results could serve as a good indicator of economic fundamentals.”

Against the consolidation on the broader market, dynamic random access memory chip makers attracted strong buying on the back of a product price rebound, dealers said.

Among the DRAM stocks, Inotera Memories Inc. gained 7 percent, the maximum daily increase, to close at NT$4.67, while Nanya Technology Corp. added 2.10 percent to end at NT$2.92.

The paper and pulp sector scored the highest gains among the eight major sectors of the market, finishing up 0.8 percent. Textile stocks and food shares rose 0.2 percent, and plastics and chemical stocks added 0.1 percent.

The machinery and electronics sector finished unchanged.

Construction shares fell 0.3 percent, and financial stocks and cement shares ended down 0.1 percent.

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