TAIEX boosted by Wall Street gains, breaks 3-session losing streak
CNATAIPEI -- Shares in Taiwan closed higher Friday as investors took cues from gains posed by Wall Street overnight to pick up bargains, breaking a three-session losing streak, dealers said.
August 24, 2013, 12:00 am TWN
Throughout the session, buying focused on large-cap stocks in both high-tech and old economy sectors, such as Taiwan Semiconductor Manufacturing Co. (TSMC), United Microelectronics Corp. (UMC) and Formosa Plastics Corp., the dealers said.
However, the upside on the broader market was capped as uncertainty over the U.S. Federal Reserve's monetary policy remained, preventing many investors from chasing prices to push the index even higher, the dealers added.
The weighted index closed up 58.93 points, or 0.75 percent, at 7,873.31, after moving between 7,845.92 and 7,895.13, on turnover of NT$72.12 billion (US$2.40 billion).
The market opened up 0.63 percent in the wake of a technical rebound staged on Wall Street overnight after China and Europe reported expansions in their manufacturing activities, the dealers said.
Interest in market heavyweights accelerated to push the index higher, with the index moving closer to the nearest technical resistance level of around 7,900 points, before profit-taking emerged to limit the gains at the end of the session, they said.
TSMC, the most heavily weighted stock in the local market, led the bellwether electronics sector and the broader market, as a research report released by Barclays Capital said the chip maker is expected to receive rush orders in October as several international brands will launch new products.
“TSMC shares had been oversold in recent sessions, so investors seized the Barclays report and the rebound on Wall Street as an excuse to take advantage of the stock's relatively low valuation,” MasterLink Securities analyst Tom Tang said.
TSMC rose 2.64 percent to close at NT$97.00 with 44.28 million shares changing hands, while buying was also seen in rival UMC, which ended up 4.26 percent at NT$12.25 on trading volume of 133.05 million shares.
The electronics sub-index closed up 0.95 percent, although Hon Hai Precision Co., which assembles iPads and iPhones for Apple Inc., ended down 0.25 percent at NT$80.50.
Riding the wave of a rebound on the broader market, the old economy sector also moved ahead, with Formosa Plastics Corp. up 2.11 percent to close at NT$72.50, and textile maker Far Eastern New Century up 1.23 percent to end at NT$32.95.
“But, today's reduced turnover showed that many investors were reluctant to chase prices at a time when market sentiment remained haunted by worries over a possible early exit by the Fed from its monthly US$85 billion bond-buying program,” Tang said.
“Once the U.S. central bank starts to scale down its stimulus measures in September as the market has widely expected, depleting liquidity is likely to impose a material impact on the global equity markets,” Tang said.
He added that unless turnover expands to US$80 billion or even higher, it is unlikely that the local market will breach the stiff technical resistance level at around 7,900 points.