Local market gains capped after index hit 9,000
CNA April 19, 2014, 12:17 am TWN
TAIPEI -- Shares in Taiwan failed to remain above the 9,000-point mark at the close of trade as investors locked in their earlier gains, although the index still ended up from the previous day, dealers said.
Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電), the most heavily weighted stock in the local market, got a boost thanks to a better-than-expected sales forecast for the second quarter, but other electronics heavyweights suffered a pullback that limited their gains, the dealers said.
The property sector underperformed the broader market amid fears that the Taipei city government will introduce new measures to curb rising home prices in the capital, they added.
The weighted index on the Taiwan Stock Exchange closed up 22.50 points, or 0.25 percent, at 8,966.66, after moving between 8,945.56 and 9,002.70 on turnover of NT$70.26 billion (US$2.33 billion).
The market opened up 0.57 percent and immediately breached 9,000 points in the early morning session after TSMC led the index as investors hailed the world's largest chip maker's upbeat sales guidance for the second quarter and higher-than-expected first-quarter earnings, the dealers said.
Some investors, however, then pocketed their earlier profits by taking advantage of relatively high valuations of select high-tech stocks such as contract PC maker Compal Electronics Inc. (仁寶電腦) and integrated circuit designer MediaTek Inc. (聯發科), to cap the uptrend, they said.
Market Sentiment Turns Cautious
"After the index hit 9,000 points, many investors became reluctant to chase prices to push the broader market higher," Asia Securities Investment Consultant analyst Chang Chih-cheng said, referring to the reduced turnover.
"I have to say that technical resistance at 9,000 points remains strong. That's why the market needs more time to digest the downward pressure to jump the hurdles," Chang said.
He said the strength of TSMC helped the broader market float above the previous close after the chip maker said a day earlier that its consolidated sales for the second quarter will rise 21.5-23.5 percent from the first quarter, beating an earlier market estimate of a 14-18 percent increase.
TSMC closed up 2.50 percent at the day's high of NT$123.00 on the back of its higher-than-expected net profit for the first quarter.
Underperforming the broader market, Compal fell 2.92 percent to close at NT$21.60 and PC brand Acer Inc. shed 1.29 percent to end at NT$19.15, while MediaTek closed down 0.98 percent at NT$457.00.
In the property sector, Huaku Development Co. (華固建設) lost 1.13 percent to end at NT$78.70 and Shining Building Business Co. (鄉林建設) fell 1.16 percent to close at NT$25.60 after local media reports said that housing tax on homes in Taipei that are not lived in by owners might be increased.
"I am not particularly worried about the failure for the index to close above 9,000 points for the moment," Chang said. "As foreign institutional investors still hold a large chunk of long position contracts in futures, they are likely to continue to buy into local shares to push the index in the spot market."
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