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As investors await Yellen remarks, high-priced gadgets lift local market

TAIPEI--Shares in Taiwan got a boost Wednesday from high-priced electronics stocks, in particular smartphone camera lens supplier Largan Precision Co. (大立光電), extending market momentum from a session earlier, dealers said.

While the high-tech sector attracted bargain hunters to push trading volume above NT$100 billion, the financial sector remained weak after the Ministry of Finance proposed raising the sales tax imposed on banks to 5 percent from the current 2 percent, the dealers said.

The weighted index on the Taiwan Stock Exchange closed up 25.24 points, or 0.29 percent, at 8,600.86, after moving between 8,563.87 and 8,626.68 on turnover of NT$103.95 billion.

The market opened down 6.58 points and fell to the day's low in the wake of a mild pullback on Wall Street overnight on lower-than-expected U.S. consumer confidence, but buying in select electronics stocks emerged to vault the index back into positive territory, the dealers said.

After the index breached the 8,600 point mark, however, some investors pocketed their earlier gains to cap the uptrend at the end of the session, they said.

"Technical hurdles at 8,600 points remained high, and that's why many investors were reluctant to chase prices for the moment amid fears of a major pullback," Mega International Investment Services Corp. analyst Alex Huang said.

Thanks to the gains posted by high-priced electronics stocks, impact on the local market from Wall Street's overnight weakness was offset by investors picking up bargains, Huang said.

Investors Should Closely Watch the US Market's Performance

Huang said investors should continue to keep a close eye on the U.S. market's performance, which could be moved by a congressional testimony of Federal Reserve Chair Janet Yellen scheduled for Thursday.

"Largan was highlighted in bargain hunting as the stock had consolidated for some time," Huang said. "Investors remained upbeat about Largan's bottom line on hopes that Apple Inc. will launch a new generation of iPhone to boost the company's shipments this year."

Largan rose 7 percent, the maximum daily increase, to close at NT$1,320.00 to remain the most expensive stock in the local market.

But Huang said Largan shares could face stiff technical resistance as the stock moved closer to NT$1,370.

HTC Corp. (宏達電) rose 4.92 percent to end at NT$138.50 after Cher Wang (王雪紅), chairwoman of the smartphone vendor, said a day earlier that her company is expected to turn a profit in the second quarter of this year and remain profitable.

Taiwan Semiconductor Manufacturing Co. (台積電), the most heavily weighted stock in the local market, however, fell 0.46 percent to close at NT$107.50, while integrated circuit designer MediaTek Inc. (聯發科) ended unchanged at NT$445.00.

In the financial sector, E. Sun Financial Holding Co. (玉山金控) fell 1.05 percent to close at NT$18.90 and Fubon Financial Holding Co. (富邦金控) lost 0.47 percent to end at NT$42.00 amid lingering impact from a sales tax hike planned by the government.

"I expect the increase of the sales tax to 5 percent from 2 percent will drag down local banks' profits by NT$27 billion-NT$28 billio year," Huang said.

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