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Local stock market pauses after five-day winning streak

TAIPEI--Shares in Taiwan took a breather Thursday, breaking a five-session winning streak as the bellwether electronics sector suffered downward pressure, dealers said.

Investors rushed to lock in recent gains they had built up from Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電), the most heavily weighted stock in the local market, while Hon Hai Precision Industry Co. (鴻海), which assembles iPads and iPhones for Apple Inc. remained resilient, the dealers said.

Financial Sector Outperformed the Market

The financial sector outperformed the broader market as bargain hunters continued picking up market heavyweights such as Fubon Financial Holding Co. (富邦金控) and Cathay Financial Holding Co. (國泰金控), lending some support to the broader market, they added.

The weighted index on the Taiwan Stock Exchange closed down 12.71 points, or 0.13 percent, at 9,109.00, after moving between 9,093.57 and 9,131.66 on turnover of NT$101.72 billion (US$3.38 billion).

The market opened up 1.75 points and moved to the day's high on follow-though buying from a session earlier, but profit taking set in as investors took cues from a lackluster Wall Street overnight to sell, the dealers said.

After the index fell below the 9,100 point mark, some bargain hunting emerged in an effort to push back the broader market above that level at the close, they said.

“Today's losses were limited and completely technical in nature after the market posted significant gains in the past few sessions,” Concord Securities analyst Kerry Huang said. “Looking at the tolerable downward pressure, I am confident that an uptrend in the market remains intact.”

Huang said that as foreign institutional investors have built a large number of long-position contracts in the futures market, foreign buying is expected to continue to push the spot market higher.

Technical Resistance

“But the market is faced with stiff technical resistance ahead of 9,200 points. It could consolidate in the near term and range between 9,000 and 9,200 points,” Huang said.

The electronics sub-index closed down 0.29 percent. Among the falling high-tech stocks, TSMC shed 1.61 percent to close at NT$122.00 and smartphone camera lens supplier Largan Precision Co. (大立光) lost 1.49 percent to end at NT$1,985.00.

“These two stocks simply suffered a technical correction after their recent strong showings. But their improving earnings prospects could help them resume an upside after the pause,” Huang said.

Hon Hai rose 0.11 percent to close at NT$93.50 and smartphone vendor HTC Corp. (宏達電) gained 0.31 percent to end at NT$163.50.

DRAM supplier Inotera Memories Inc. (華亞科技) rose 7 percent, the maximum daily increase, to close at NT$42.30 after the company upgraded a shipment forecast for the second quarter.

In the financial sector, which closed up 0.08 percent, Fubon Financial gained 0.82 percent to close at NT$43.10 and Cathay Financial rose 0.22 percent to end at NT$46.00. Huang said these financial stocks remained market laggards after recent consolidation.

Among the old economy stocks, food product maker Uni-President Enterprises Corp. (統一企業) rose 0.57 percent to close at NT$53.30 and Nan Ya Plastics Corp. added 0.89 percent to end at NT$67.70.

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