Local market rebounds, led by electronics
CNA May 3, 2014, 12:02 am TWN
TAIPEI -- Shares in Taiwan staged a technical rebound Friday on gains posted by select high-tech companies that reported better-than-expected earnings for the first quarter, dealers said.
The weighted index on the Taiwan Stock Exchange ended up 75.88 points, or 0.86 percent, at 8,867.32, after moving between 8,839.92 and 8,875.90, on turnover of NT$96.92 billion (US$3.05 billion).
Investors Sideline Ahead of US Data
The index was held down, however, by a reluctance among investors to chase prices before the United States released non-farm payroll data for April later Friday, fearing that a surprise could have consequences for global markets, dealers said.
Also keeping the index from rising higher were old economy stocks, which generally remained in the doldrums throughout the session, they said.
The market opened up 0.63 percent as bargain hunters turned active to take advantage of the losses seen in the previous session.
Buying then continued with electronics heavyweights, in particular integrated circuit designer MediaTek Inc. (聯發科) and smartphone camera lens supplier Largan Precision Co.(大立光電), drawing attention, dealers said.
With many investors sidelined ahead of the U.S. jobs report, turnover was not high enough to push the index up further at the end of the session, they said.
Technical Resistance at 8,900 Points
"After a plunge (of 1.91 percent) on April 25, the local market became technically weaker. It needs some time to consolidate," Ta Ching Securities analyst Andy Hsu said.
"Technical resistance ahead of 8,900 points remained strong and that's why many investors were reluctant to chase prices to help the index vault past that level," Hsu said.
Hsu said the electronics sector, which ended up 1.22 percent, served as an anchor to keep the index moving in positive territory.
Among the high-tech stocks that gained ground, MediaTek closed up by the daily maximum of 7 percent at NT$505.00, with 20.82 million shares changing hands, after the IC designer reported a 17.7 percent sequential increase in net profit for the first quarter.
Buying spread to other high-priced electronics stocks, with Largan ending up 3.98 percent at NT$1,960.00 on optimism that the company will benefit when Apple Inc., one of the company's major clients, launches the next generation of iPhones later in the year.
AU Optronics Corp. (友達光電) gained 2.63 percent to close at NT$11.70 after the flat panel maker reported a net profit in the first quarter, the fourth consecutive quarter in which it was profitable after several quarters of losses.
Wall Street Faces Pullback
"Valuations on Wall Street remain high and many investors fear a pullback that could impact global markets, including Taiwan," Hsu said.
"In addition, before the release of the U.S. job data today, it was no surprise that investors preferred to maintain a cautious attitude."
"After the U.S. Federal Reserve wrapped up a policymaking meeting Wednesday and did not give global equity markets any surprises, investors have shifted their attention to companies that have good fundamentals, like MediaTek," Hsu said.
In the non-high tech sector, Nan Ya Plastics Corp. (南亞塑膠) fell 0.15 percent to close at NT$66.00, while food maker Uni-President Enterprises Corp. (統一企業) rose 0.78 percent to end at NT$51.50.
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