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September 26, 2017

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Local market edges up amid late buying

TAIPEI--Shares in Taiwan closed slightly higher Wednesday as buying late in the session propped up select large-cap electronics stocks to help the broader market reverse earlier losses, dealers said.

The buying focused on Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) and United Microelectronics Corp. (UMC, 聯電) because of lingering optimism that the global semiconductor industry will perform well the rest of the year, they said.

The financial sector fell back from the gains seen a day earlier as investors pocketed profits, while trading in old economy stocks was generally lackluster after the broader market breached 9,200 points a day earlier, dealers said.

The weighted index on the Taiwan Stock Exchange closed up 7.43 points, or 0.08 percent, at the day's high of 9,229.80, after hitting a low of 9,204.76, on turnover of NT$100.33 billion (US$3.34 billion).

The market opened down 3.87 points and quickly fell to the day's low as investors ignored another fresh high posted on the Dow Jones Industrial Average overnight, with many market heavyweights trading below their previous close, dealers said.

Boost of TSMC and UMC

Bargain hunting appeared late in the session, however, to boost the value of specific stocks, such as TSMC and UMC, and vault the broader index back into positive territory by the close, they said.

"After the index breached the 9,200-point mark, it was no surprise that the local bourse took a pause today despite another record high on Wall Street overnight," President Securities analyst Vickie Hsieh said.

"Fortunately, the local bourse remained awash in liquidity as foreign investors kept moving funds into Taiwan, and the index managed to close above yesterday's close on bargain hunting," Hsieh said.

Hsieh said buying in TSMC and UMC was evidence that foreign institutional investors were still willing to buy. TSMC, the most heavily weighted stock in the local market, rose 0.40 percent to close at NT$125.00, and UMC gained 1.05 percent to end at NT$14.50.

"Although TSMC reported a 1.8 percent month-on-month drop in consolidated sales for May, the company is very likely to achieve the higher end of its second quarter sales guidance (of NT$180 billion-NT$183 billion) on solid demand for mobile devices," Hsieh said.

In addition to ample liquidity, the spot market also benefited from a move by foreign institutional investors to build a large chunk of long contracts (contracts that expect the value of the stocks to rise) in the futures market, dealers said.

Hon Hai Shares Fall

On the down side, Hon Hai Precision Industry Co. (鴻海), which assembles iPhones and iPads for Apple Inc., fell 0.32 percent to close at NT$93.80 after the company on Tuesday reported an 8.99-percent month-on-month drop in consolidated sales in May.

In the non-high tech sector, Formosa Plastics Corp. lost 0.39 percent to close at NT$76.70, and Asia Cement Corp. (亞洲水泥) dropped 1.63 percent to end at NT$39.25, while E. Sun Financial Holding Co. (玉山金) ended unchanged at NT$19.50.

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