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June 28, 2017

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Local stock market ends day with consolidation

TAIPEI -- Shares in Taiwan closed lower Friday as the local bourse remained in consolidation mode ahead of heavy technical resistance at around 9,000 points, dealers said.

The bellwether electronics sector came under downward pressure as investors took hints from losses suffered by the tech-heavy NASDAQ index overnight, while financial stocks encountered selling as investors locked in gains seen a session earlier, the dealers said.

The weighted index on the Taiwan Stock Exchange closed down 41.21 points, or 0.46 percent, at 8,889.69, after moving between 8,878.32 and 8,945.63 on turnover of NT$93.64 billion (US$3.11 billion).

The market opened up 0.14 percent and rose to the day's high on follow-through buying from a day earlier, but with the index moving closer to the 9,000 point mark, investors rushed to pocket earlier gains to push down the broader market into the red at the close, the dealers said.

"The 9,000 point mark did impose a psychological impact on many investors who feared that the market would face a major pullback," Hua Nan Securities (華南證券) analyst Kevin Su said.

"Judging from the moderate turnover, many investors preferred to stay on the sidelines. It was a quiet session without any dramatic movement," Su said.

High-priced High Tech Stocks Trended Lower

The analyst said many high-priced high tech stocks trended lower due to their relatively high valuations to keep the bellwether electronics sector in the doldrums throughout the session.

Integrated circuit designer MediaTek Inc. (聯發科) fell 1.17 percent to close at NT$506.00 as investors cashed in on the stock's recent gains, which resulted from optimism toward global smartphone chip demand, while smartphone manufacturer HTC Corp. (宏達電) shed 2.95 percent to end at NT$164.50.

"However, select notebook computer makers, such as Compal (仁寶) Electronics Inc. and Pegatron Corp. (和碩), outperformed the electronics sector as investors were encouraged by their first-quarter results," Su said.

Compal gained 2.24 percent to close at NT$22.85 as the company defied conventional wisdom to report a slight sequential increase in the first quarter, traditionally a slow season, while Pegatron ended up 4.98 percent at NT$49.50 after several foreign brokerages raised target prices on the stock.

TSMC Outperformed the Broader Market

Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電), the most heavily weighted stock in the local market, also outperformed the broader market, rising 0.42 percent to close at NT$120.00 amid optimism that the chip maker would report a good April sales report after the market closed.

"Without TSMC's gains, the index would have fallen further today," Su said.

In the financial sector, Cathay Financial Holding Co. fell 0.78 percent to close at NT$44.65, and Yuanta Financial Holding Co. lost 0.98 percent to end at NT$15.15.

"Buying in the financial sector yesterday disappeared today, meaning that the local bourse lacked a mainstream sector to maintain strength. I expect the index will continue to move in a narrow range in the near future," Su said.

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