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Profit taking reverses early rebound, local bourse again ends below 7,500

TAIPEI -- Profit-taking emerged on the Taiwan Stock Exchange to reverse an earlier upside, sending the benchmark weighted index lower at the end of the session yesterday, dealers said.

Although select market heavyweights such as smart phone vendor HTC Corp. and Hon Hai Precision Industry Co., which assembles iPhone and iPad for Apple, attracted some bargain hunting, it was not enough to sustain the early gains, dealers said.

Selling focused on certain old economy stocks and added further downward pressure on the broader market amid lingering concerns over the global economy, dealers said.

The weighted index closed down 14.68 points, or 0.19 percent, at 7,437.04, after moving between 7,398.80 and 7,478.51, Turnover totaled NT$66.31 billion during the session.

The market opened up 4.79 points and moved to the day's high on a mild technical rebound from a 1.84 percent drop in the previous session. But profit taking set in, dragging the index into negative territory after it moved close to the 7,500 point mark, dealers said.

“After yesterday's sell-off, the local bourse has become very weak technically,” Concord Securities analyst Kerry Huang said. “It was no surprise that the market failed to rebound today since it still needs some time to consolidate.”

While some large cap high tech stocks managed to make a comeback during the session, there were few signs that investors were willing to chase prices to push the index higher, Huang said.

Among the rebounding electronics stocks, HTC rose 1.41 percent to NT$252.00 following a 7 percent dive a day earlier, while Hon Hai Precision gained 0.93 percent to end at NT$86.80 after a 3.70 percent decline in the previous session.

“Weak global economic fundamentals remained a major concern to many investors, in particular after the International Monetary Fund cut its forecasts,” Huang said.

Earlier this week, the IMF lowered its forecast for global economic growth for 2012 from 3.5 percent to 3.3 percent, the slowest growth since 2009.

In addition, Huang said, many investors are watching closely whether debt-ridden Spain will seek a bailout amid strong opposition in the country against further austerity measures.

“These unfavorable factors have dampened market sentiment,” Huang said. “I expect the local bourse to continue to move in a narrow range in the near future.”

At the end of the session, the cement sector had suffered the heaviest losses among the eight major sectors of the market, finishing down 1.0 percent. It was followed by financials with a drop of 0.6 percent, construction stocks with 0.4 percent, and the plastics and chemical sector with 0.1 percent.

Bucking the downtrend of the broader market, textiles gained 0.6 percent, foodstuffs added 0.5 percent, and paper and pulp stocks rose 0.1 percent, while the machinery and electronics sector closed unchanged.

In the cement sector, Taiwan Cement ended down 1.53 percent at NT$35.40, and Asia Cement closed 0.82 percent lower at NT$36.10.

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