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Local shares market remains in consolidation mode

TAIPEI--Shares in Taiwan ended lower Thursday, dropping below the 8,600 point mark in narrow trade as large-cap stocks in both the electronics and old economy sectors remained in the doldrums, dealers said.

With the approach of the Lunar New Year holiday, more and more investors are staying on the sidelines, which has resulted in shrinking turnover, dealers said.

Smartphone camera lens supplier Largan Precision Co. (大立光電), the most expensive stock in the local market, dived Thursday as investors locked in their earlier gains while waiting for the release of the company's fourth quarter data after the market close, dealers said.

The weighted index on the Taiwan Stock Exchange closed down 30.20 points, or 0.35 percent, at the day's low of 8,595.10, off an earlier high of 8,647.87. Turnover totaled NT$87.63 billion (US$2.91 billion) during the session.

The market opened up 0.22 percent and rose to the day's high on follow-through buying from the previous day. But with the escalation of selling in high-priced stocks, in particular Largan, the index dropped into negative territory at the close, dealers said.

"It was boring day as most of the market heavyweights appeared stagnant," Concord Securities analyst Kerry Huang said. "With only two trading sessions left before the Lunar New Year holiday, many investors have retreated from the trading floor."

The local market will be closed Jan. 28 and trading will resume Feb. 5 after the Chinese New Year holiday.

Low Margin Trade Signifies Cautious Sentiment of Retail Investors

According to Huang, margin trade has fallen to a relatively low level of about NT$198 billion, indicating that many retail investors are just sitting idly.

Among the losing electronics stocks, Largan fell 4.82 percent to close at NT$1,185.00 as market sentiment turned cautious before the release of its fourth quarter data.

"The market has been expecting a good fourth quarter earnings report from Largan, which had boosted the stock significantly in recent sessions," Huang said. "Some investors simply pocketed their earlier gains today."

Taiwan Semiconductor Manufacturing Co. (台積電), the most heavily weighted index in the local market, closed unchanged at NT$107.50, while Hon Hai Precision Industry Co. (鴻海精密), which assembles iPhones and iPads for Apple Inc., dropped 0.36 percent to close at NT$83.90.

Bucking the downtrend of the broader market, United Microelectronics Corp. (聯華電子) ended up 0.78 percent at NT$12.85 after Daiwa Securities forecast first-quarter growth of the contract chip maker's sequential sales on the back of solid demand for drive ICs, saying it will outperform the entire semiconductor foundry business.

In the financial sector, which closed down 0.75 percent, Yuanta Financial Holding Co. (元大金控) fell 1.72 percent to close at NT$17.15, and Cathay Financial Holding Co. (國泰金控) shed 1.05 percent to end at NT$47.10.

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