Local market gains on rebound of electronics, financial shares
CNATAIPEI--Shares in Taiwan closed higher Tuesday after the electronics and financial sector staged a technical rebound, dealers said.
October 9, 2013, 12:07 am TWN
However, some investors locked in their gains from certain old economy stocks, which capped the upside in the broader market, dealers said.
The broader market continued to move in consolidation mode as sentiment remained cautious amid uncertainty on how Washington will solve its debt ceiling problems, they added.
The weighted index ended up 41.99 points, or 0.50 percent, at 8,375.65, after fluctuating between 8,311.59 and 8,375.65, on turnover of NT$83.04 billion (US$2.82 billion).
The market opened up 6.67 points and continued to rise as large cap high-tech stocks attracted buying after integrated circuit designer MediaTek Inc. reported better-than-expected third quarter sales, dealers said.
Buying also rotated to the financial sector on hopes that Taiwan's Financial Supervisory Commission (FSC) and the China Insurance Regulatory Commission (CIRC) will come up with stimulus measures during their scheduled meeting next week, dealers said.
“I prefer to say that the gains were just technical in nature as uncertainty over the global equity markets will remain unless the U.S. Congress agrees to raise the country's debt ceiling by mid-October,” Mega International Investment Services Corp. analyst Alex Huang said.
Further Volatility Expected in Global Markets
Huang said that he does not think the U.S. wants to see a default on its debt obligations, but further volatility in the global markets is possible unless the problem is resolved this month.
“The local market failed to climb out of the current narrow trading range and will continue to move like that,” Huang said.
Among the gaining large-cap electronics, MediaTek rose 1.47 percent to close at NT$378.50 after it reported third quarter consolidated sales of NT$39.01 billion, up 17.22 percent from the second quarter.
Taiwan Semiconductor Manufacturing Co., the most heavily weighted stock in the local market, climbed 1.94 percent to end at NT$105.00, while Hon Hai Precision Industry Co., which assembles iPhone and iPad for Apple Inc., closed up 0.80 percent at NT$75.80.
In the financial sector, Fubon Financial Holding Co. rose 1.90 percent to end at NT$42.95 and Cathay Financial Holding Co. gained 1.92 percent to close at NT$45.05. The two companies own large insurance operations and are expected to be the biggest beneficiaries of the expected leads from the FSC-CIRC meeting.
Bucking the gains on the broader market, Tainan Spinning Co. fell 4.13 percent to close at NT$22.05, while ready-to-wear clothing supplier Makalot Industrial Co. shed 3.74 percent to end at NT$165.50.
“Since the local market breached 8,350 points last week, it has been faced with strong technical resistance. The index is likely remain in consolidation for some time before challenging 8,400 points,” Huang said.
Even if the market suffers a pullback, it could gain technical support at around 8,150 points in the short term, he added.