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Taiwan shares close up on futures-led buying

2019/03/20 17:48:58

CNA file photo

Taipei, March 20 (CNA) Shares in Taiwan ended higher Wednesday as investors pushed up the spot market in a bid to profit from the futures market, in which March futures contracts settled that day, dealers said.

The financial sector extended its momentum from a session earlier and along with gains posted by select tech heavyweights, the broader market continued to move above the 10,500-point mark throughout the session, the dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE), or Taiex, closed up 39.24 points, or 0.37 percent, at 10,551.56, after moving between 10,506.96 and 10,556.81 on turnover of NT$118.67 billion (US$3.85 billion).

The market opened up 0.16 percent on a technical rebound from a session earlier, and buying continued into the end of the session, focusing on financial stocks, which had underperformed the broader market for some time, as well as large-cap tech stocks such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the dealers said.

However, turnover remained moderate, as many investors remained cautious ahead of the conclusion of a two-day policymaking meeting of the U.S. Federal Reserve due later in the day, they said.

"Foreign institutional investors held a large chunk of long- position futures contracts," Mega International Investment Services Corp. analyst Alex Huang said.

"It was no surprise for them to chase shares on the spot market at a time when March futures contracts expired today," he said.

According to Huang, foreign institutional investors owned about 60,000 long-position contracts more than short-position ones as of Tuesday, a relatively high amount in net long-position contracts.

Data released by the TWSE after the market closed showed that foreign institutional investors bought a net NT$5.60 billion-worth of shares on the main board Wednesday.

"Buying was seen among certain electronics stocks. In addition, financial stocks with relatively low valuations also attracted buying, sending share prices higher by the end of the session," Huang said.

In the electronics sector, TSMC, the most heavily weighted stock in the local market, gained 0.62 percent to close at the day's high of NT$242.00, with 22.96 million shares changing hands.

Among other gaining tech stocks, iPhone assembler Hon Hai Precision Industry Co. added 0.14 percent to end at NT$72.40, integrated circuit packaging and testing services provider ASE Technology Holding Co. rose 0.64 percent to close at NT$63.00, and PC brand Asustek Computer Inc. gained 0.67 percent to end at NT$226.00.

Bucking the upturn, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., fell 0.53 percent to close at NT$4,695.00.

"Financial stocks played catch-up after their recent doldrums," Huang said. "The gains were technical in nature and had nothing to do with fundamentals," he added.

In the financial sector, Fubon Financial Holding Co. rose 0.43 percent to close at NT$47.15, Cathay Financial Holding Co. added 0.64 percent to end at NT$46.95, and Yuanta Financial Holding Co. grew 1.15 percent to close at NT$17.65.

The old economy sector appeared mixed, with Formosa Chemicals & Fibre Corp. down 0.91 percent to close at NT$108.50, but China Steel Corp., the largest steelmaker in Taiwan, rose 0.80 percent to end at NT$25.05.

"Technically speaking, the local main board has been faced with strong resistance after it breached the 10,500-point mark Monday," Huang said. "That's why the room for gains has been capped for the moment."

"Moreover, investors should pay close attention to the Fed's meeting and its comments on the economy, which served as an indication for future adjustments in its monetary policy," he added.

Huang said trade talks between the United States remained an issue that continued to affect market sentiment.

"I do not rule out the possibility of the Taiex pulling back and testing the 240-day moving average of 10,449 points," he said.

(By Frances Huang)