Local market stages mild rebound, closes above 8,600 mark
January 23, 2014, 12:23 am TWN
TAIPEI--Shares in Taiwan staged a mild technical rebound Wednesday as large-cap electronics stocks stabilized after slumping a session earlier, dealers said.
Buying spread to select old economy stocks, also on technical factors, to help the index close above the 8,600-point mark, they said.
Turnover was lower than in recent sessions, however, with many investors playing it safe before U.S. tech giants, such as Microsoft Corp., Apple Inc. and Google Inc., release their results later this month, dealers said. The results of those companies could have a major influence on the U.S. market and Taiwan's electronics sector, dealers said.
The weighted index closed up 25.40 points, or 0.29 percent, at 8,625.30, after moving between 8,596.99 and 8,633.57, on turnover of NT$91.36 billion (US$3.04 billion).
The market opened 0.92 points lower and fell to the day's low before rebounding, as the bellwether electronics sector emerged from its weakness seen a day earlier.
Among the large cap electronics stocks that posted gains, integrated circuit designer MediaTek Inc. (聯發科) bounced back from Tuesday's 5.37 percent decline, dealers said.
Cement, petrochemical and textile stocks also attracted interest to push the index higher before investors moved to the sell side to lock in gains and keep the index's rise in check, they said.
"After the index breached 8,600 points during the session, the local market faced stiff technical resistance," Mega International Investment Services Corp. analyst Alex Huang said.
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"With tech heavyweights, in particular Apple, to report their results later in the month, investors here appeared reluctant to chase prices for the moment. I'm not surprised that today's gains were limited," Huang said.
Among the rebounding large-cap electronics, MediaTek rose 2.84 percent to close at NT$399.00. Tuesday's plunge was caused by JP Morgan's downgrade of its recommendation for MediaTek to "neutral" from "overweight."
"I expect MediaTek shares will fall into consolidation mode after today's rebound as the stock will continue to feel the impact from lingering concerns over its sales for the first quarter, a traditionally slow season for the semiconductor industry," Huang said.
Taiwan Semiconductor Manufacturing Co. (台積電), the most heavily weighted stock in the local market, added 0.94 percent to end at NT$107.50, recovering from a 0.93 percent fall seen Tuesday.
Bucking the uptrend on the broader market, flat panel maker AU Optronics Corp. (友達光電) and rival Innolux Corp. (群創光電) fell 1.62 percent and 1.84 percent respectively, to close at NT$9.11 and NT$10.65, as TV panel prices were lower in the second half of January than in the first.
In the old economy sector, Taiwan Cement Corp. (台灣水泥) rose 0.67 percent to end at NT$42.50, and Nan Ya Plastics Corp. (南亞塑膠) gained 1.22 percent to close at NT$66.30, while textile maker Far Eastern New Century Corp. (遠東新世紀) ended up 2.02 percent at NT$32.75.
"The reduced turnover showed cautious sentiment toward the ongoing earnings season in the U.S.," Huang said. "Many investors also preferred to stay on the sidelines ahead of the policymaking meeting scheduled by the U.S. Federal Reserve for Jan. 29-30," Huang said.