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Taiwan shares end above 10,100 points amid U.S.-China trade optimism

2019/02/18 17:43:21

Taipei, Feb. 18 (CNA) Shares in Taiwan moved higher to close above the 10,100-point mark in the wake of gains posted on the U.S. stock markets at the end of last week amid optimism toward a possible trade deal between Washington and Beijing, dealers said Monday.

While chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) cut its sales forecast for the first quarter due to a production interruption, sentiment toward the electronics sector was unaffected, with buying in tech stocks pushing the broader market higher, the dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE), or Taiex, closed up 80.50 points, or 0.80 percent, at 10,145.28, after moving between 10,096.94 and 10,165.77 on turnover of NT$102.72 billion (US$3.33 billion).

The market opened up 0.32 percent in a knee-jerk reaction to the upturn in the U.S. markets, where the Dow Jones Industrial Average closed up 1.74 percent and the S&P 500 index ended up 1.09 percent Friday on optimism over a possible trade deal between the United States and China, the dealers said.

Buying accelerated as investors rushed to pick up tech stocks, in particular in the Apple Inc. supply chain, at a time when market confidence was reinforced further by gains posted in other regional markets, they said.

Interest also spread to old economy stocks in the food and petrochemical sectors, helping the Taiex jump over technical hurdles ahead of the 10,100-point mark by the end of the session, the dealers said.

"It seems that sentiment in the local market improved to some extent after the U.S. markets were lifted by the U.S.-China trade deal hopes," Hua Nan Securities Investment Management Chairman David Chu said.

"Interest in other regional markets presented further evidence of such an upbeat feeling about the upcoming trade talks between the world's two largest economies," Chu said, referring to the markets such as Shanghai, Shenzhen, Hong Kong and Tokyo.

After a round of negotiations held in Beijing last week, trade talks between the U.S. and China will continue in Washington this week. Before the new round of talks open, U.S. President Donald Trump said over the weekend that his country is closer than ever before to "having a real trade deal" with China.

Chu said investors were attracted to large-cap Apple concept stocks, which had lagged behind the broader market in recent sessions.

Among the gaining Apple suppliers, iPhone assembler Hon Hai Precision Industry Co. rose 1.00 percent to close at NT$71.00, and Largan Precision Co., a smartphone camera lens supplier, gained 1.02 percent to end at NT$3,970.00.

TSMC, the most heavily weighted stock in the local market, gained 1.32 percent to close at NT$230.00 with 16.95 million shares changing hands, even though the chipmaker announced Friday that it had lowered its sales guidance for the first quarter to US$7 billion-US$7.1 billion from US$7.3 billion-US$7.4 billion.

The downgrade came after TSMC found that the impact from a production problem caused by substandard raw materials was bigger than expected, costing the company about US$550 million in sales. TSMC said the incident could cut its earnings per share by NT$0.42 for the first quarter.

Dayu International Securities Investment Consultant Co. analyst Chang Chih-cheng said the impact on TSMC's bottom line was minor, and that more importantly, the market has high hopes that the chipmaker will later this year issue a higher cash dividend per share than its previous NT$8.

Among the gaining old economy stocks, food brand Great Wall Enterprise Co. rose 2.33 percent to close at NT$35.20 and rival Uni-President Enterprises Corp. added 0.96 percent to end at NT$73.40.

In the petrochemical sector, Formosa Petrochemical Corp. rose 3.13 percent to close at NT$115.50, and Formosa Chemicals & Fibre Corp. gained 0.99 percent to end at NT$102.50.

The financial sector closed up 0.67 percent, with Fubon Financial Holding Co. up 0.79 percent to close at NT$44.75, Mega Financial Holding Co. up 1.14 percent to end at NT$26.70, and Yuanta Financial Holding Co. up 1.78 percent to close at NT$17.15.

"Since the local electronics sector has felt the pinch from a slowing economy, volatility in the local equity market could be possible despite today's gains," Chu said.

According to the TWSE, foreign institutional investors bought NT$4.98 billion-worth of shares on the main board Monday.

(By Frances Huang)