Local market climbs to 8,731.94 as buying rotates to the financial sector
CNA Wednesday, March 19, 2014, 12:07 am TWN
TAIPEI, Taiwan -- Shares in Taiwan closed higher Tuesday as the local financial sector benefited from rotational buying in the wake of ruling Kuomintang lawmakers' move to push the service trade pact with China to the legislative floor, dealers said.
But in contrast to the financial sector, bellwether electronics stocks were lackluster, and old economy stocks remained slow, preventing the broader market from gaining further at the close, they said.
The weighted index of the Taiwan Stock Exchange ended up 31.84 points, or 0.36 percent, at 8,731.94 after moving between 8,713.51 and 8,759.55 on turnover of NT$98.53 billion (US$3.25 billion).
The market opened up 0.54 percent in a knee-jerk reaction to the gains posted by Wall Street overnight, rising to the day's high on eased concerns over Ukraine even as the eastern European country's Crimea region passed a referendum to join Russia, dealers said.
However, with the index moving closer to the nearest technical resistance ahead of 8,800 points, electronics stocks in particular were faced with some profit taking to cap the uptrend at the end of the session, they said.
"Despite the gains in share prices, turnover failed to expand much. As a result, the market failed to overcome the technical hurdles at around 8,800 points," Asia Securities Investment Consultant analyst Chang Chih-cheng said.
Chang said the financial sector served as a driver to lift the index as investors have high hopes that the services trade agreement signed between Taiwan and China in June 2013 will create new business opportunities for local financial institutions.
Bellwether High-tech Stocks Turns Stagnant
"With select large-cap high-tech heavyweights turning stagnant, it was not easy for the broader market to make a breakthrough at the present time," Chang said.
On Monday, lawmakers of the ruling Kuomintang labeled the trade pact an executive order, which they said allows it to bypass procedures that could be blocked by opposition parties and take automatic effect.
"The financial sector had been lagging. Buying rotated to the sector as bargain hunters turned active soon after the local market opened," Chang said. The financial sub-index ended up 0.74 percent.
Among the gaining financial stocks, Yuanta Financial Holding Co. (元大金控) gained 4.33 percent to close at NT$15.65, while Mega Financial Holding Co. (兆豐金控) added 1.30 percent to end at NT$23.45.
In the electronics sector, which closed up 0.21 percent, Hon Hai Precision Industry Co. (鴻海精密), the world's largest contract electronics maker, fell 0.81 percent to close at NT$86.00, and smartphone camera lens supplier Largan Precision Co. (大立光電) lost 0.36 percent to end at NT$1,375.00.
Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電), the most heavily weighted stock in the local market, however, rose 0.44 percent to close at NT$114.50.
"There remains optimism over TSMC's earnings outlook. I expect interest in the stock will pick up to lead the broader market to move higher shortly after today's consolidation," Chang said.
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