Taiwan shares end higher but gains capped

2019/05/15 17:17:52 fontsize-small fontsize-default fontsize-big
Taiwan shares end higher but gains capped

Taipei, May 15 (CNA) Shares in Taiwan bounced back Wednesday from a slump seen the previous two sessions as investors reacted to a technical rebound in the United States, dealers said.

The bellwether electronics sector continued to dictate the broader market and drove the rebound, but the upturn was capped ahead of stiff technical resistance at around the 60-day moving average of 10,621 points, they said.

The weighted index on the Taiwan Stock Exchange (TWSE), the Taiex, ended up 41.46 points, or 0.39 percent, at 10,560.71, after moving between 10,535.24 and 10,612,50. Turnover was NT$113.93 billion (US$3.66 billion).

The market opened up 0.15 percent on a technical rebound from the past two sessions, when the Taiex fell 1.81 percent on rising concerns over the Washington-Beijing trade dispute.

Investors in Taiwan were buoyed by a 0.82 percent rise in the Dow Jones Industrial Average and a 1.14 percent rise in the tech-heavy Nasdaq, dealers said.

After the Taiex rose to the day's high, however, some investors shifted to the sell side to cap the gains, and the sell-off became more apparent in the final few minutes of the session, they said.

"Look at the reduced turnover. Many investors appeared reluctant to chase prices amid the trade war that could negatively affect the world economy," Mega International Investment Services Corp. analyst Alex Huang said.

Tuesday's turnover was NT$140.10 billion.

"More importantly, the market was closing in on the nearest technical hurdle at 10,621 points and many investors preferred to keep more cash on hand due to fears of a pullback," Huang said.

Stocks in the bellwether electronics sector generally moved higher to help the broader market climb out of its previous doldrums.

The electronics sector closed up 0.24 percent at 429.33 points after hitting an early high of 432.18, with contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, up 0.20 percent to end at NT$249.00.

Also in the high-tech sector, integrated circuit packaging and testing services provider ASE Technology Holding Co. rose 1.80 percent to close at NT$68.00, and contract electronics maker Wistron Corp. added 1.28 percent to end at NT$23.50.

Bucking the upturn, iPhone assembler Hon Hai Precision Industry Co., second next to TSMC in terms of market capitalization, lost 2.38 percent to close at NT$77.80 after the company reported disappointing results for the first quarter.

"After the latest fall, Hon Hai could find the nearest technical support at around NT$77, the intraday low on April 1," Huang said.

Buying also spread to the non-tech sector with Formosa Plastics Corp. closing 0.93 percent higher at NT$109.00, and Formosa Petrochemical Corp. gaining 1.87 percent to close at NT$109.00.

Food brand Uni-President Enterprises Corp. was down, however, falling 0.64 percent to close at NT$77.70.

In the financial sector, which ended up 0.32 percent, Cathay Financial Holding Co. added 1.24 percent to close at NT$40.95, and Mega Financial Holding Co. rose 0.68 percent to end at NT$29.70.

"Despite the rebounds in share prices at home and abroad, market sentiment remained haunted by the Washington-Beijing trade issue," Huang said. "In Taiwan, how the U.S. market will perform will continue to move local shares."

Huang said investors should pay close attention to whether or when the U.S. and China will resume trade talks, which could lead to a solution to their current trade dispute.

"The Dow could face further volatility, which would send the Taiex lower amid uncertainty over the global trade issue," Huang said. "But the Taiex could see technical support ahead of 10,363 points, the intraday low on Tuesday."

According to the TWSE, foreign institutional investors sold a net NT$13.52 billion worth of shares on the main board Wednesday after a net sell of NT$9.34 billion on Tuesday.

(By Frances Huang)
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