Local bourse ends above 7,900 points

The upside was capped, however, when some investors locked in gains in the last trading session before the Lunar New Year holiday amid fears that negative leads could emerge on Wall Street and Europe during the holiday period, they said.

The local bourse is scheduled to reopen on Feb. 18 after the holiday.

The weighted index closed up 19.71 points, or 0.24 percent, at the day's low of 7,906.65, off an early high of 7,941.65, on turnover of NT$91.83 billion (US$3.11 billion).

The market opened up 0.49 percent on a rebound on Wall Street overnight, which eased investors' concerns over political uncertainty in Italy and Spain and its possible impact on the eurozone's debt problems, dealers said.

Yuan-denominated Business Attract Investors

Before profit-taking emerged late in the trading session, momentum in the financial sector pushed the benchmark index to its high for the day on hopes that the new yuan-denominated operations would strengthen banks' bottom lines, they said.

“In the wake of the new yuan business, investors rushed to pick up financial stocks, and the buying in the financial sector boosted today's trading volume on the broader market,” Hua Nan Securities analyst Henry Miao said.

According to Miao, the financial sector accounted for about 20 percent of the market's turnover Wednesday, double its normal share of about 10 percent.

“While it remains to be seen whether and when the new yuan business will generate significant sales for local banks, investors decided to buy on hope,” Miao said.

A total of 46 banks operating in Taiwan, including 29 domestically registered ones, launched yuan denominated operations Wednesday, backed by a currency clearing mechanism set up by Taiwan and China over the past six months.

The market's financial sub-index closed up 0.9 percent. Cathay Financial Holding gained 4.44 percent to close at NT$35.30, and Chinatrust Financial Holding added 1.98 percent to end at NT$18.05.

Slow Season Effect for Electronics

With financial stocks attracting much of the market's attention, interest in the mainstream high-tech sector fell off to some extent. The electronics sub-index finished up 0.5 percent.

“Concerns over the slow season effect in the first quarter of this year for the electronics sector remain in place. Investors appeared cautious trading high-tech stocks,” Miao said.

Smartphone camera lens supplier Largan Precision fell 1.11 percent to close at NT$805.00 after the company reported an almost 30 percent month-on-month decline in sales for January.

Smartphone vendor HTC gained 2.07 percent, however, to end at NT$271.50 after rebounding from a 7 percent plunge on Tuesday caused by the company's cautious sales forecast for the first quarter.

Miao said investors should follow how Wall Street and the European markets move during the Lunar New Year holiday before deciding on investment strategies in Taiwan when trading resumes.

“If turnover expands to NT$100 billion or more, it's possible that the local market will quickly challenge 8,000 points,” he said.

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