Taiwan shares end up but gains capped

06/11/2019 06:34 PM
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Taipei, June 11 (CNA) Shares in Taiwan extended momentum from the previous session to end higher Tuesday, but gains were capped by technical resistances after the main board breached 10,600 points, dealers said.

The bellwether electronics sector continued to drive the upturn, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), while the uptrend in financial sector shares seen a session earlier was reversed, limiting the gains on the broader market, they said.

Turnover remained moderate as many investors preferred to stay on the sidelines, watching closely how the trade disputes between the United States and China will develop, dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex ended up 41.29 points, or 0.39 percent, at 10,607.76, after moving between 10,548.06 and 10,637.90, on turnover of NT$121.96 billion (US$3.88 billion).

The market opened up 1.07 points and buying accelerated to push the Taiex past the 10,600 point mark and to the day's high in the wake of gains posted on U.S. markets, where the Dow Jones Industrial Average rose 0.30 percent, the sixth consecutive session increase, and the tech-heavy Nasdaq index added 1.05 percent, dealers said.

The higher U.S. markets reflected improved market sentiment after U.S. President Donald Trump announced that proposed tariffs on Mexican exported goods would be suspended indefinitely, saying he was confident that Mexico will tighten measures to crack down on illegal migration.

Eased concerns over the imposition of tariffs on Mexican goods also encouraged investors in Taipei to pick up tech stocks, pushing the Taiex up further, although the benchmark index came off an early high at the end of the session, dealers said.

"The Taiex moved higher to breach 10,600 points so the main board faced stiff technical resistance ahead of 10,700 for the moment," Dayu International Securities Investment consultant analyst Chang Chih-cheng said.

"While fears over trade tensions between the U.S. and Mexico have been reduced to some extent, investors remain cautious about trade issues between Washington and Beijing," Chang said. "So, not many investors were willing to chase prices right now, which kept turnover moderate."

Fortunately, Chang said, TSMC continued to move higher, leading the bellwether electronics sector as well as the broader market to rise throughout the session.

TSMC, the most heavily weighted stock on the local market, gained 1.88 percent to close at NT$244.50 with 31.94 million shares changing hands. TSMC's gains contributed about 45 points of the increase on the Taiex and boosted the bellwether electronics sector by 0.99 percent.

Buying in the electronics sector rotated to optoelectronics stocks with smartphone camera lens maker Genius Electronic Optical Co. up 10 percent, the maximum daily increase, to end at NT$353.00, and rival Largan Precision Co., a supplier of Apple Inc., up 1.56 percent to close at NT$3,575.00.

Shares in iPhone assembler Hon Hai Precision Industry Co. rose but underperformed the electronics sector, up 0.42 percent, to end at NT$72.40. Investors remain concerned over a succession plan after chairman Terry Gou (郭台銘) revealed plans to withdraw from the front line of the company's operations after announcing his intention to participate in the presidential primary of the opposition Kuomintang.

Bucking the upturn, shares in integrated circuit designer MediaTek Inc. fell 2.53 percent to close at NT$308.00 as investors locked in gains seen a session earlier.

Chang said the financial sector came under pressure, offsetting the gains posted by the electronics sector.

In the financial sector, which fell 0.78 percent, Mega Financial Holding Co. fell 2.03 percent to end at NT$31.30 and Chang Hwa Commercial Bank lost 3.50 percent to close at NT$20.70, while Cathay Financial Holding Co. rose 1.81 percent to end at NT$42.10 after reporting a strong bottom line in the first five months of this year.

The losses suffered by financial stocks reflected worries over a possible rate cut by the U.S. Federal Reserves, which could undermine their profitability, after Washington reported lower than expected job data for May, Chang said.

"It is possible the Taiex will move higher to challenge 10,700 points but how far the main board will go will depends on foreign institutional investors' trading strategies," Chang said.

According to the TWSE, foreign institutional investors bought a net NT$3.48 billion worth of shares on the main board Tuesday.

(By Frances Huang)


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