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September 24, 2017

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Local shares market ends up, led by semiconductor heavyweights

TAIPEI, Taiwan -- Shares in Taiwan moved higher to close above 8,400 points Tuesday as large-cap stocks in the semiconductor sector were boosted by their better-than-expected consolidated sales data for January, dealers said.

However, turnover remained thin as many investors stayed on the sidelines, waiting for the U.S. congressional testimony by new chair of U.S. Federal Reserve Janet Yellen later in the day, dealers said.

The weighted index on the Taiwan Stock Exchange closed up 38.61 points, or 0.46 percent, at 8,430.56, after moving between 8,401.54 and 8,439.33. Turnover totaled NT$79.19 billion (US$3.61 billion) during the session.

The market opened up 0.26 percent and rose to the day's high as several semiconductor heavyweights such as Taiwan Semiconductor Manufacturing Co. and MediaTek Inc. attracted buying based on their latest sales data, dealers said.

With the index moving closer to the nearest technical resistance at around 8,500 points, however, the gains were capped by the end of the session as some investors pocketed their earlier profits, dealers said.

"After taking a beating last week, the local bourse has fallen into consolidation mode," President Securities analyst Vickie Hsieh said. "Without any significant expansion in turnover, it would be hard for the market to stage a strong technical rebound now."

The low trading volume showed cautious sentiment among investors, who are waiting for Yellen's congressional testimony to gain some clues about the Fed's next move regarding its quantitative easing, Hsieh said.

The U.S. central bank announced in late January to reduce its monthly bond-buying program by additional US$10 billion.

"Although several integrated circuit giants posted gains in the local market, many investors appeared reluctant to chase prices," Hsieh said. "Technical resistance ahead of 8,500 points has been strong."

The world's largest contract chipmaker TSMC, the most heavily weighted index in the local market, rose 1.46 percent to close at NT$104.50 after it posted NT$51.43 billion in consolidated sales for January, up 3.5 percent from a month earlier and 8.4 percent year-on-year.

"To my knowledge, TSMC benefited from a move by some clients to postpone their orders from December to January but its sales in February are likely to fall," Hsieh said. "I think investors were buying TSMC shares simply for trading purposes since the first quarter remains a slow season for the semiconductor sector.

IC designer Mediatek added 2.20 percent to end at NT$419.00 after it reported NT$12.84 billion in consolidated sales for January, a 1.87 percent drop from the previous month but a 51.95-percent increase year-on-year.

However, the world's largest contract electronics maker Hon Hai Precision Industry Co., which assembles iPhone and iPad for Apple Inc., fell 1.59 percent to close at NT$80.40 after posting a month-on-month sales decline of more than 30 percent in January.

In the non-high tech sector, food product maker Uni-President Enterprises Corp. gained 0.83 percent to close at NT$48.60, while Formosa Plastics Corp. rose 0.93 percent to end at NT$76.30.

China Development Financial Holding Co. added 1.61 percent to close at NT$8.84 after it announced a plan to acquire Cosmos Bank, a mid-sized commercial bank in Taiwan.

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