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June 27, 2017

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Local market ends at 6.5-year high; Largan hits record high

TAIPEI, Taiwan -- Shares in Taiwan on Thursday rose to their highest level in over six and a half years and ended at 9,316.81 points as the bellwether electronics sector regained its footing, pushing up the broader market, dealers said.

Shares of smartphone camera lens supplier Largan Precision Co. (大立光電) hit a fresh high at the close amid optimism about the company's bottom line, which led other high-priced high-tech stocks, such as power management system maker Delta Electronics Inc., to go higher, the dealers said.

The Central News Agency reported that the weighted index on the Taiwan Stock Exchange ended up 36.88 points, or 0.39 percent, at 9,316.81, a more zZthan six-year high, after fluctuating between 9,283.38 and 9,324.40, on turnover of NT$90.27 billion (US$3.01 billion).

Old-economy Sector Stays Flat

As market attention shifted to the electronics sector, old economy stocks generally stayed in the doldrums, which prevented the index from rising further.

The market opened up 0.11 percent in a knee-jerk reaction to gains posted on Wall Street overnight as investors felt relieved after the latest U.S. Federal Reserve policymaking meeting indicated that interest rates are not expected to rise until 2015, the dealers said.

With select high-tech stocks trending upward, the broader market overcame stiff technical resistance ahead of 9,300 points during the session, and continued to move above the previous close until the end of the session, they said.

"Wall Street served as a catalyst for the gains of the local market, as concerns were reduced to some extent due to the Fed statement," Concord Securities analyst Kerry Huang told CNA.

Fed Chair Janet Yellen said the U.S. central bank will maintain its interest rates at low levels even after the bank completely winds down its stimulus package. The Fed cut an additional US$10 billion from its monthly bond-buying program to US$35 billion in the meeting.

Electronics Sub-index

Up 0.55%

Huang said that, encouraged by the upturn of the tech-heavy NASDAQ index overnight, the local electronics sub-index closed up 0.55 percent. "Thanks to the strength of Largan, the electronics sector made a comeback, leading to the rise in the index," he said.

Largan rose 7 percent, the maximum daily increase, to close at NT$2,190.00 after the company said a day earlier that efforts by many countries to develop 4G networks are expected to raise smartphone demand and in turn boost smartphone lens shipments in the second half of this year.

Among other rising electronics heavyweights, Delta Electronics (台達電) gained 1.52 percent to end at NT$201.00 after BNP Paribas raised its target price on the stock to NT$225 from NT$200.

In addition, integrated circuit designer MediaTek Inc. (聯發科) added 0.97 percent to close at NT$518.00, while contract chip maker Taiwan Semiconductor Manufacturing Co. (台積電) grew 0.40 percent to end at NT$126.00 and smartphone vendor HTC Corp. closed unchanged at NT$133.00.

In the old economy sector, Formosa Plastics Corp. (台塑工業) rose 1.67 percent to end at NT$79.30, while Taiwan Cement Corp. (台灣水泥) lost 0.11 percent to close at NT$45.00 and Hotai Motor Co. (和泰汽車) ended down 0.68 percent at NT$365.00.

"After the index closed above 9,300 points, it is possible that the local market will face some technical corrections in the short term," Huang said. "A move by foreign investors to reduce their long position contracts in the futures market is expected to bring volatility to the spot market."

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