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May 23, 2017

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Market ends flat, old-economy stocks erode gains

TAIPEI--Shares in Taiwan closed little changed Thursday, although the bellwether electronics sector posted gains, led by select large-cap stocks on the back of their better-than-expected second-quarter results, dealers said.

The weighted index on the Taiwan Stock Exchange ended down 0.7 points at 9,230.61 after moving between 9,218.55 and 9,282.01 on turnover of NT$89.11 billion (US$2.97 billion).

Caution, Caution: Analyst

"Investors need to keep a close eye on the global equity markets, which could be moved by geopolitical developments related to Ukraine," Concord Securities analyst Kerry Huang said. "Caution is expected to continue to dictate the local market in the near future."

The gains on the broader market were eroded by old-economy stocks to push down the broader market slightly below the previous close, the dealers said.

The market opened up 0.49 percent in a knee-jerk reaction to a rebound staged on Wall Street overnight as investors at home and abroad ignored Washington's lower-than-expected retail sales data for July, the dealers said.

Buying accelerated to push up the index to the day's high as select high-tech stocks, in particular iPhone and iPad assembler Hon Hai Precision Industry Co. (鴻海精密) and Advanced Semiconductor Engineering Inc. (ASE,日月光半導體), attracted strong buying due to their strong second-quarter results, they said.

However, with the index moving closer to the nearest technical resistance level ahead of 9,300 points, selling in the non-high-tech sector emerged to drag down the broader market into negative territory at the end, they added.

"The moderate turnover showed that many investors remained reluctant to chase prices. That's why the index failed to sustain itself at the day's high and even dipped into the red," Huang said.

Technical Barrier at 9,300

"It seemed that the technical hurdle at around 9,300 points remained high. It will be hard to surmount these barriers unless trading volume expands," Huang said.

Huang said the earlier gains in the Thursday trading session were simply technical in nature after recent heavy losses.

"The rebound was engineered by the electronics sector, which absorbed most of the funds in the market and squeezed liquidity from the old-economy sector," Huang said.

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