Fund inflow drives Taiwan firm shares higher
CNATAIPEI -- Shares in Taiwan got a boost from further inflows of foreign funds yesterday to close nearly a percent higher at above the 7,900-point mark, dealers said.
March 2, 2013, 12:02 am TWN
Although Wall Street made a minor correction overnight, the gains the U.S. market posted Wednesday prompted investors to chase share prices in Taiwan's market, which had lagged behind others in the region, they said. The local bourse was closed Thursday for a public holiday.
Old economy stocks, in particular in the food sector, attracted strong buying on their relatively low valuations, while select high-tech stocks, such as flat panel manufacturers, posted gains to push the index even higher, dealers said.
The weighted index closed up 66.65 points, or 0.84 percent, at the day's high of 7,964.63, off an early low of 7,917.72, on turnover of NT$80.60 billion.
Foreign institutional investors were net buyers of NT$5.52 billion in shares.
The market opened up 0.25 percent and stayed in positive territory throughout the session as investors were encouraged by the Dow Jones Industrial Average's combined gain of 1.10 percent on Wednesday and Thursday, dealers said.
But the market's upward momentum slowed as the index moved closer to the nearest point of technical resistance at around 8,000 points, they said.
“The market was basically driven by high liquidity,” Concord Securities analyst Kerry Huang said. “But as turnover failed to expand significantly, it was no surprise that the gains simply stalled before 8,000 points.”
Huang said that unless trading volume expands to NT$110 billion or higher per day, the local bourse is unlikely to get past the high technical hurdles ahead.
“With moderate turnover, I expect the market to move in a narrow range for some time to digest downward pressure down the road,” Huang said. “I think that kind of movement will be healthier than any surge, which could lead to a major correction.”
The food sector benefited from rotational buying, finishing up 2.22 percent, with Uni-President Enterprises Corp. up 3.24 percent to close at NT$57.30 and rival Wei Chuan Foods Corp. up 4.55 percent to end at NT$46.00.
Among other winning electronics stocks, smartphone camera lens maker Largan Precision Co. added 2.13 percent to close at NT$817.00, and flat panel supplier Innolux Corp. gained 1.22 percent to end at NT$16.60.
The electronics sub-index close up 0.66 percent.
Huang cautioned that external factors could play a big role in the market in the days ahead.
“Foreign factors, in particular the political climate in Italy, are expected to dictate local market sentiment,” Huang said.
“Investors should closely watch whether Italy will be able to form a coalition government soon to continue its austerity policy, which could impact the debt situation in the eurozone.”
Separately, the U.S. dollar fell against the New Taiwan dollar Friday, shedding NT$0.039 to close at NT$29.666.
Turnover totaled US$580 million during the trading session.
The greenback opened at the day's high of 29.705, and moved to an early low of NT$29.594 before rebounding.