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Local market ends flat in consolidation mode

TAIPEI -- Shares in Taiwan closed little changed Friday as the market fell into consolidation mode following gains seen a session earlier, dealers said.

Although investors hailed a day earlier a move by the U.S. Federal Reserve to gradually cut its economic stimulus measures, fears increased that the Fed's retreat will lead to a flight of foreign funds out of the Asian market, which could depress assets value in the region, they said.

Some large-cap stocks in the bellwether electronics sector, such as Taiwan Semiconductor Manufacturing Co. (TSMC,台積電), turned weaker, while select conglomerate stocks in the old economy sector got a boost from year-end buying from these groups, which were aiming to boost share prices to dress up their books, they added.

The weighted index ended up 1.13 points, or 0.01 percent, at 8,408.53, after moving between 8,392.38 and 8,439.37, on turnover of NT$82.58 billion (US$2.76 billion).

The market opened down 7.19 points and moved to the day's low as investors locked in gains posted the previous day, but some buying emerged to keep the index moving in a narrow range during most of the session, the dealers said.

“The local market was quiet today as investors took a breather after yesterday's upturn,” Grand Fortune Securities analyst Chen Wei-tai said. “With the index breaching the 8,400-point mark, technical resistance has increased.”

Chen said that although the Fed announced a moderate reduction in its bond-buying program, the tapering-off is expected to prompt foreign investors to move their funds out of the region.

Conglomerate Buying to Peak Next Week

“Depleting liquidity is the last thing the equity markets want to see. So, investor sentiment has turned cautious,” he said.

Among the high-tech stocks, which were in the doldrums after the previous gains, TSMC, the world's largest contract chip maker, fell 0.49 percent to close at NT$102.00, while Hon Hai Precision Industry Co.(鴻海精密) lost 0.38 percent to end at NT$79.00.

Smartphone vendor HTC Corp. (宏達電) dropped 2.13 percent to close at NT$138.00 amid lingering concerns over fierce global competition, while personal computer brand Asustek Computer Inc. (華碩電腦) gained 1.11 percent to end at NT$274.00 on optimism toward its fourth-quarter sales.

“Against the stagnation, some conglomerate stocks outperformed the broader market to lend some support to the index as these conglomerates tended to pick up their own shares in an attempt to cosmetic their books at the end of the year,” Chen said.

In the Yulon Group (裕隆集團), the largest car maker in Taiwan, Yulon Motor Co. (裕隆汽車) rose 3.59 percent to end at NT$51.90 and Yulon Nissan Motor Co. (裕日汽車) rose 3.10 percent to close at NT$433.00.

"I expect such year-end buying from conglomerates to continue and reach a peak next week. Due to the conglomerate buying, the local market could find strong support at around 8,300 points in the near term," Chen said.

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