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Local market starts to retreat as electronics stocks weaken

TAIPEI, Taiwan -- Shares in Taiwan dipped Thursday as the bellwether electronics sector weakened as a result of investors locking in gains they had built up in the sector in recent sessions, dealers said.

The weighted index on the Taiwan Stock Exchange closed down 34.67 points, or 0.37 percent, at 9,253.38, after moving between 9,217.97 and 9,289.02 on turnover of NT$80.08 billion (US$2.67 billion).

Turnover Remains Anemic

“Judging from today's movement, I expect the local equity market to have technical support at around 9,100 points in the near term. But unless turnover expands to NT$120 billion, it will be difficult for the market to breach 9,300 points,” Concord Securities analyst Kerry Huang said.

The market opened down 1.23 points and fell further to the day's low as investors here shrugged off an upturn posted on Wall Street overnight, with high-tech stocks suffering downward pressure on corrections, the dealers said.

As the financial sector kept moving higher and some bargain hunting emerged in the afternoon session, the broader market witnessed its losses capped by the end of the session, they said.

“The local market still moved in consolidation mode,” Huang said. “With turnover failing to expand, the electronics sector lacked momentum to go up and in fact fell throughout the session.”

Bucking the downturn on the broader market, the financial sector closed up 0.45 percent.

The financial sector extended its momentum amid hopes that Taipei and Beijing will come up with more measures to encourage cross-Taiwan Strait financial exchanges, which lent some support to the broader market and prevented the index from falling further, the dealers said.

E. Sun Financial Holding Co. (玉山金控) gained 2.45 percent to end at NT$18.85 as foreign institutional investors raised their holdings in the stock, while Cathay Financial Holding Co. (國泰金控) rose 0.79 percent to close at NT$50.90.

China Dream of Financials

“Taiwan and China are scheduled to hold a series of meetings on market openness in the financial sector, starting in September. Many investors have high hopes that cross-strait business exchanges will increase,” Huang said.

The electronics sub-index closed down 0.70 percent, underperforming the broader market.

“Investors tended to pocket their gains in high-tech stocks for the moment. I expect that following the current consolidation, an uptrend in the sector will resume, in particular after Apple Inc. unveils the next generation of the iPhone, likely in September, which will boost shipments of its local suppliers,” Huang said.

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