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Strong Wall Street showing sends local market above 8,600 points

TAIPEI--Shares in Taiwan closed above the 8,600 point mark Friday as investors were encouraged by the strength of Wall Street overnight to buy into local shares, dealers said.

The bellwether electronics sector led the gains posted by heavyweight stocks, in particular smartphone camera lens supplier Largan Precision Co. (大立光), while the old economy and financial stocks also attracted bargain hunters, they said.

The weighted index on the Taiwan Stock Exchange ended up 77.24 points or 0.9 percent at 8,601.86, after moving between 8,571.29 and 8,612.08 on turnover of NT$93.67 billion (US$3.09 billion).

The market opened up 0.55 percent in the wake of the latest gains on Wall Street as investors rushed to pick up high-tech stocks, taking hints from an uptrend on the tech-heavy NASDAQ index overnight, dealers said.

Momentum accelerated as buying spread to the non-high tech sector to push the index up past 8,600 points at the close, the first time that the index finished above that level since Jan. 22, when it closed at 8,625.30.

“Thanks to the Wall Street gains, the local market overcame stiff technical resistance ahead of 8,600 points,” President Securities analyst Vickie Hsieh said. “I suspect foreign institutional investors stood on the buy side today.”

According to the TWSE, foreign institutional investors served as net buyers of NT$10.36 billion worth of local shares on the main board.

Local Market Faces New Wave of Technical Resistance

“How far the uptrend on the main board will go will depend on foreign institutional investors' attitude,” Hsieh said.

“But, technically speaking, after breaching 8,600 points, the local market will be faced with another wave of technical resistance. I do not rule out the possibility of a pullback soon.”

“The electronics sector, especially optoelectronics stocks, served as a driver to push up the broader market,” Hsieh said. The optoelectronics sub-index ended up 3.19 percent.

As one of the gaining optoelectronics stocks, Largan rose 7 percent, the maximum daily increase, to close at NT$1,245.00 after Deutsche Securities raised its target price on the stock to NT$1,500 from NT$1,400 amid upbeat earnings prospects.

Deutsche Securities, which recommended a “buy” on Largan shares, has expected the company will post NT$88.8 in earnings per share for 2014, up from 2013's NT$71.64 on the back of the launch of upgraded zoom lenses.

Among other optoelectronics stocks, flat panel maker AU Optronics Corp. (友達光電) added 7 percent to end at NT$9.87 on expectations that the company will benefit from efforts to develop curved screen TVs, while rival Innolux Corp. (群創光電) gained 4.78 percent to close at NT$10.95.

Taiwan Semiconductor Manufacturing Co. (台積電), the most heavily weighted stock in the local market, rose 0.94 percent to end at NT$107.50, while Hon Hai Precision Industry Co. (鴻海精密), an assembler of Apple Inc.'s iPhones and iPads, added 1.09 percent to close at NT$83.70.

In the non-high tech sector, food producer Uni-President Enterprises Corp. (統一企業) gained 1.94 percent to end at NT$49.95, Taiwan Cement Corp. (台灣水泥) rose 2.40 percent to close at NT$46.95, and Cathay Financial Holding Co. (國泰金控) ended up 1.32 percent at NT$46.10.

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