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Local market rebounds but turnover remains thin

TAIPEI -- Shares in Taiwan staged a technical rebound Friday but turnover remained thin, making it hard for the index to overcome stiff technical resistance ahead of 8,400 points, dealers said.

Many investors preferred to stay on the sidelines amid lingering concerns that the U.S. Federal Reserve may decide next week to wind down its massive monthly fund injections into the U.S. economy, dealers said.

While the bellwether electronics sector continued to lose luster, buying rotated to select old economy stocks and the financial sector, helping the broader market to close in positive territory, dealers said.

The weighted index closed up 15.61 points, or 0.18 percent, at 8,376.94 after moving between 8,346.83 and 8,391.82, on a turnover of NT$70.94 billion (US$2.40 billion).

The market opened down 6.32 points and fell to the day's low on follow-though selling from the previous session, but bargain hunting emerged, helping to push the index back into positive territory by the end of the session.

Investors Reluctant to chase prices on QE-exit Concern

"It seemed that the main board had some technical support because of high liquidity as the index moved closer to 8,300 points. That's why it staged a technical rebound from the losses in the past few sessions," said Asia Securities Investment Consultant analyst Chang Chih-cheng.

"But, investors were reluctant to chase prices as market sentiment has been haunted by concerns that the Fed will scale back its current stimulus measures, after the U.S. reported better-than-expected job data for November," Chang said.

Chang said investors have become particularly cautious as the next Fed meeting approaches. The two-day meeting will end Dec. 18.

The electronics sub-index closed 0.15-percent lower, with integrated circuit designer MediaTek Inc. (聯發科), one of the sector's heavyweights, falling 0.95 percent to end at NT$417.00.

ASE shares, however, rose 0.18 percent to close at NT$27.65, snapping a three-session losing streak.

"Fortunately, buying rotated to the financial sector on expectations that life insurance companies will see their property asset value rising due to a change in the accounting methods," Chang said.

In the financial sector, which ended up 0.45 percent, Cathay Financial Holding Co. (國泰金融) rose 0.98 percent to close at NT$46.30 and Shin Kong Financial Holding Co. (新光金控) gained 0.99 percent, ending at NT$10.20. The two companies have huge property assets.

In the plastics sector, Nan Ya Plastics Corp. (南亞塑膠) closed 1.76-percent higher at NT$69.50, and Namchow chemical industrial Co. (南僑化工) rose 1.11 percent to NT$45.65 on relatively low valuations.

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