Local market ends flat ahead of 9,500 points
August 29, 2014, 12:00 am TWN
TAIPEI--Shares in Taiwan closed little changed Thursday as investors locked in gains they built up a session earlier amid fears over a possible technical pullback, with the index moving closer to the 9,500-point mark, dealers said.
The weighted index on the Taiwan Stock Exchange ended down 7.22 points, or 0.07 percent, at 9,478.37, after moving between 9,453.49 and 9,502.42 on turnover of NT$99.80 billion (US$3.33 billion).
Upward Momentum Stalls
"Trading volume fell today in reflection of caution about corrections. Unless turnover expands, it will not be easy for the local market to overcome the technical resistance," Concord Securities analyst Kerry Huang said.
"After yesterday's rally, the local equity market faces technical barriers at around 9,500 points," Huang said. "That's why the willingness to chase prices was low today and many investors even shifted to the sell side."
The bellwether electronics sector fell into consolidation mode, but the strength of Hon Hai Precision Industry Co. (鴻海精密) prevented the entire sector from falling into the red on the back of optimism toward the company's earnings outlook, the dealers said.
The old economy and financial sectors also encountered some downward pressure, which kept the broader market weak for most of the trading session, they added.
The market opened up 0.14 percent and rose to the day's high on follow-through buying from the previous day, when the market closed up 0.97 percent. However, after the index breached the 9,500-point mark, selling emerged to drag down share prices into negative territory, the dealers said.
However, some bargain hunters turned active in the late trading session to pick up select electronics blue chips, such as Taiwan Semiconductor Manufacturing Co. (TSMC,台灣積體電路) and Largan Precision Co. (大立光電), to narrow the losses at the end of the session, they said.
The Return of Hon Hai
Huang said that fortunately, Hon Hai, the world's largest contract electronics maker, which assembles iPads and iPhones for Apple Inc., rose 3.66 percent to close at NT$102.00.
The reference price of Hon Hai for Thursday was lowered to NT$98.40 after the stock went ex-dividend by doling out a NT$1.8 cash dividend and a NT$1.2 stock dividend for each share held by investors.
The buying in Hon Hai showed optimism that the stock will return to NT$112, Wednesday's closing level — the day before it went ex-dividend — on hopes that Apple's new iPhone could boost the Taiwanese supplier's bottom line for the second half of this year.
Among the falling high tech stocks, TSMC, the most heavily weighted stock in the local market, fell 0.40 percent to close at NT$125.00, but recovered from an early low of NT$124.50, and smartphone camera lens supplier Largan lost 0.98 percent to end at NT$2,515.00 off an early low of NT$2,500.00.
"I believe the losses suffered by those large cap electronics stocks resulted from technical factors after their recent strong showings," Huang said.
In the non-high tech sector, Nan Ya Plastics Corp. (南亞塑膠) fell 0.14 percent to close at NT$72.20 and Cathay Financial Holding Co. (國泰金控) lost 0.58 percent to end at NT$51.80.