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Taiwan shares end higher amid U.S.-China trade hopes

2019/01/21 17:48:38

Taipei, Jan. 21 (CNA) Shares in Taiwan continued their momentum from the previous session to close higher Monday, with local investors encouraged by gains posted by U.S. markets at the end of last week amid hopes the United States and China are moving toward a resolution of their trade disputes, dealers said.

Buying was apparent in the bellwether electronics sector, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) as bargain hunters picked up the stock, which had been hammered by its lower than expected sales guidance for the first quarter, they said.

Turnover remained moderate as the on-going earnings season in Taiwan and on Wall Street has turned some investors away from the local main board, and such caution also led some investors to shift to the sell side, preventing the broader market from ending above 9,900 points, dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex ended up 53.34 points, or 0.54 percent, at 9,889.40, after moving between 9,870.27 and 9,919.94, on turnover of NT$91.79 billion (US$2.98 billion).

The market opened up 0.35 percent and rose to the day's high on follow-through buying from a session earlier, when the Taiex closed up 0.48 percent, with buying sparked by the upturn on the U.S. markets, where the Dow Jones Industrial Average closed up 1.38 percent and the tech savvy Nasdaq index ended up 1.03 percent on Friday, dealers said.

However, as the Taiex breached the 9,900 point mark, selling emerged to cap any gains by the end of the session, with investors cautious about corporate fundamentals during the current earnings season, they said.

The rise on Wall Street came after a news report which said U.S. Treasury Secretary Steven Mnuchin was considering lifting some or all tariffs imposed on Chinese imports, though a Treasury spokesman denied Mnuchin had made any such recommendation.

"Despite the conflicting reports, a plan by Chinese deputy premier Liu He (劉鶴) to visit Washington at the end of this month for trade talks still offered hope that both sides are moving to reduce trade tensions," Concord Securities analyst Kerry Huang said.

"In addition to the U.S. markets, other regional markets such as Shanghai, Shenzhen and Hong Kong also moved higher, prompting local investors to buy,' Huang said. "TSMC, which attracted bargain hunters, served as a driver to boost the Taiex."

Shares in TSMC rose 1.14 percent to close at NT$221.00 with 29.36 million shares changing hands. Led by TSMC, the bellwether electronics sector ended up 0.58 percent and the semiconductor sub-index closed up 1.13 percent.

"It seems that investors left behind TSMC's disappointing sales forecast for the first quarter. But the stock still faces the nearest technical resistance at around NT$233.50, the 60-day moving average," Huang said.

At an investor conference held last Thursday, TSMC said due to slowing global demand and inventory adjustments, its first quarter sales could fall 22 percent from a quarter earlier, compared with an earlier market estimate of a 10-20 percent fall.

In the tech sector, United Microelectronics Corp., a smaller rival to TSMC, gained 2.63 percent to close at NT$11.70, memory chipmaker Nanya Technology Corp. rose 1.42 percent to end at NT$57.20, and iPhone assembler Hon Hai Precision Industry Co. added 0.56 percent to close at NT$71.20.

Bucking the upturn on the broader market, shares in Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., fell 1.72 percent to end at NT$3,720.00, off an early high of NT$3,870.00, after investors locked in earlier gains.

Buying was also seen among old economy stocks, with food brand Uni-President Enterprises Corp. up 0.97 percent to close at NT$72.80, and Formosa Chemicals & Fibre Corp. up 1.41 percent to end at NT$108.00.

In the financial sector, which closed up 0.53 percent on a technical rebound, CTBC Financial Holding Co. gained 1.50 percent to end at NT$20.25, Cathay Financial Holding Co. added 0.69 percent to close at NT$43.80, and Fubon Financial Holding Co. added 0.34 percent to end at NT$44.30.

"Investors should pay close attention to the earnings season in Taiwan and on Wall Street for more clues about the business outlook for the first quarter," Huang said, adding Apple's investor conference scheduled for Jan. 29 will be one of the most important.

According to the TWSE, foreign institutional investors bought a net NT$5.16 billion worth of shares on the main board Monday.

(By Frances Huang)
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