Local market finishes above 8,300 mark after technical rebound
February 7, 2014, 12:01 am TWN
TAIPEI, Taiwan -- Shares in Taiwan staged a technical rebound yesterday to close above the 8,300-point level after a plunge during the previous day's session, dealers said.
The bellwether electronics sector posted gains, as select heavyweights such as Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) and Hon Hai Precision Industry Co. (鴻海精密) attracted bargain hunters, the dealers said.
However, turnover fell as sentiment remained cautious about the market outlook amid fears that further volatility in the global equity markets will affect local shares, they added.
The weighted index on the Taiwan Stock Exchange ended up 46.53 points, or 0.56 percent, at 8,311.01, after moving between 8,284.77 and 8,333.56, on turnover of NT$99.03 billion (US$3.27 billion).
The market opened up 0.26 percent and momentum increased to vault the index closer to the nearest technical resistance level at around 8,400 points before some profit taking set in to cap the gains at the close, the dealers said.
"Many stocks were oversold yesterday, so it was no surprise that the market bounced back today," Concord Securities analyst Kerry Huang said, referring to net selling of more than NT$44 billion worth of stocks by foreign institutional investors the previous day.
"But it seems that the rebound was not so impressive, as many investors fear that the global markets, in particular Wall Street, will encounter more downward pressure, which could impact the local bourse," Huang said.
Huang said the reduced trading volume reflected the cautious mood as many investors remained reluctant to chase prices to boost the index even higher at the close.
Among the stocks which regained their footings, TSMC, the most heavily weighted stock in the local bourse, rose 1.49 percent to close at NT$102.00 after a 4.29-percent dive the day before.
"TSMC shares could face high technical hurdles at around NT$104. The stock could fall into consolidation mode amid lingering concerns over the current inventory adjustments," Huang said.
Hon Hai, the world's largest contract electronics maker, gained 0.74 percent to close at NT$81.90, while smartphone vendor HTC Corp. added 0.39 percent to end at NT$129.50.
Integrated circuit designer MediaTek Inc. (聯發科) extended its gains from a day earlier, rising 1.62 percent to close at NT$407.50 as investors were hoping that the company will benefit from solid demand for smartphone chips in China.
MediaTek was one of the few stocks to fend off downward pressure on the broader market to post gains Wednesday, when the index fell 2.34 percent.
In the old economy sector, textile maker Far Eastern New Century Corp. (遠東新世紀) rose 1.30 percent to close at NT$31.10 and Taiwan Cement Corp. (台泥) added 1.88 percent to end at NT$43.40, while food product supplier Uni President Enterprises Corp. (統一) fell 1.65 percent to close at NT$47.60.
"Worries over how the U.S. Federal Reserve will continue to wind down its economic stimulus measures remain. I expect the local bourse will continue to move between 8,300 points and 8,400 points over the next few sessions," Huang said.
The analyst said investors should keep a close eye on the January nonfarm payroll data, due out the following day, which could serve as a good indicator for the Fed's next move.