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Local market up, continues to consolidate

TAIPEI, Taiwan -- Shares in Taiwan closed slightly higher Wednesday after moving in a narrow range ahead of strong technical resistance at around 8,600 points, dealers said.

Turnover remained moderate, although the figure was higher than that recorded a session earlier, as many investors were wary about a possible pullback and refrained from putting funds into the market, the dealers said.

The weighted index on the Taiwan Stock Exchange closed up 20.78 points or 0.24 percent at the day's high of 8,577.01, off an early low of 8,543.15, on turnover of NT$85.42 billion (US$2.82 billion).

The market opened up 0.10 percent and kept seesawing during most of the session, with large-cap stocks in both the high-tech and old economy sectors remaining in the doldrums, the dealers said.

In the latter part of the session, buying in select market heavyweights, including Taiwan Semiconductor Manufacturing Co. (TSMC,台積電), emerged to push up the index to the day's highest level at the close, they said.

“It is likely that government-led funds bought into large-cap stocks such as TSMC in the late session in a bid to boost the broader market,” Mega International Investment Services Corp. Alex Huang said.

TSMC, the most heavily weighted stock in the local market, closed unchanged at NT$108.00 off an early low of NT$107.00, with 26.88 million shares changing hands. The stock moved below the previous closing level during most of the session as investors were unhappy with the company's cash dividend proposal.

In a board meeting, TSMC proposed issuing NT$3 in cash dividends for 2013 — lower than NT$3.5 the market had previously anticipated — even though the chip-maker posted its highest-ever earnings per share of NT$7.26 last year.

“It seems that the dividend proposal disappointed many investors,” Huang said. “But TSMC needs to keep more cash on hand to meet fund demands for future investments, in particular in high-end technology development,” he added.

TSMC is expected to spend US$9.5 billion-US$10 billion on capital expenditure in 2014, little changed from a year earlier.

Huang said the moderate trading volume made the entire electronics sector quiet, as many foreign institutional investors remained on the sidelines.

Smartphone vendor HTC Corp. (宏達電) gained 0.38 percent to close at NT$131.00, while contract notebook maker Compal Electronics (仁寶電腦) Inc. fell 2.12 percent to end at NT$20.75.

Largan Precision Co. (大立光), a smartphone camera lens supplier, rose 0.43 percent to close at NT$1,170.00 to remain the most expensive stock in the local market.

In the old economy sector, food maker Uni-President Enterprises Corp. (統一企業) ended unchanged at NT$50.00, and textile producer Far Eastern New Century Corp. (遠東新世紀) lost 0.78 percent to close at NT$31.75, while Hung Ching Development and Construction Co. (宏璟建設) ended up 0.56 percent at NT$17.80.

“Technical hurdles ahead of 8,600 points remain high. Unless turnover expands to NT$100 billion or higher, it will not be easy for the local market to overcome the technical difficulties any time soon,” Huang said.

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