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Local market buying rotates to financials

TAIPEI -- Shares in Taiwan closed up, returning to the 8,900-point mark Thursday as buying rotated to the financial sector, which has been a market laggard, dealers said.

The weighted index on the Taiwan Stock Exchange ended up 37.68 points, or 0.42 percent, at 8,930.90, after moving between 8,891.74 and 8,941.46 on turnover of NT$99.62 billion (US$3.31 billion).

Buying Stalls Ahead 9,000 Points

With the index moving closer to 9,000 points, investors appeared reluctant to chase prices to push share prices higher and cap trading volume at the close, they added.

The market opened up 0.36 percent in the wake of gains posted on the Dow Jones Industrial Average overnight after U.S. Federal Reserve Chairwoman Janet Yellen said in a congressional testimony that the Fed will continue to maintain high liquidity in the market, the dealers said.

Some profit taking then emerged to hold back the gains, but the financial sector maintained its strength to offset downward pressure suffered by certain high-tech stocks, helping the broader market to end above the precious closing level, they said.

While interest focused on financial stocks, investors cashed in on select electronics heavyweights, led by PC manufacturer Asustek Computer Inc. (華碩電腦), which reported lower-than-expected first-quarter results, the dealers said.

"The financial sector lagged behind the broader market. Investors who were sitting on large funds tended to target financial stocks to take advantage of their relatively low valuations," Concord Securities analyst Kerry Huang said.

The financial sub-index closed up 1.03 percent at 986.78 points, with Cathay Financial Holding Co. (國泰金控) up 2.74 percent at NT$45.00 to lead the entire sector higher.

Strong buying in Cathay Financial resulted from optimism toward the company's bottom line after it reported a more-than 70 percent year-on-year increase in net profit for the first quarter of this year.

Trade Pact with China Decisive

"With a trade-in-services pact with China still pending in the Legislative Yuan, the sector is unlikely to make a breakthrough any time soon."

The trade agreement with China, if passed by lawmakers, is expected to help local financial institutions gain greater access to the China market.

"Investors should stay alert over the nearest technical resistance of around 990 points for the financial sector," Huang said.

The Bellwether electronics sector was in the doldrums as select large-cap stocks suffered losses, with Asustek in focus, the dealers said.

Asustek fell 7 percent, the maximum daily decline, to close at NT$308.50 amid concerns over its profit margin, which could be eroded by its strategy to sell lower-cost smartphones.

Selling also spread to other high-priced high-tech stocks. Smartphone camera lens supplier Largan Precision Co. (大立光電) fell 1.02 percent to close at NT$1,935.00, while integrated circuit designer MediaTek Inc. (聯發科) shed 1.16 percent to end at NT$512.00.

"The electronics sector has appeared expensive. It is possible that investors, in particular foreign institutional investors, will continue to cut their holdings and pocket their recent gains," Huang said.

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