Taipei, Aug. 23 (CNA) Shares in Taiwan closed slightly higher Friday after moving in a small range as investors were cautious ahead of a speech planned by U.S. Federal Reserve Chair Jerome Powell later in the day, dealers said.
The continued weakness of the Chinese yuan also concerned investors, because a falling yuan could lead to currency depreciations throughout the region, which could spark an exodus of foreign funds, they said.
The weighted index on the Taiwan Stock Exchange (TWSE), the Taiex, ended up 8.33 points, or 0.08 percent, at 10,538.11, after moving between 10,503.07 and 10,541.73, on turnover of NT$108.196 billion (US$3.45 billion).
The market opened down 3.63 points as investors reacted to mixed performances by U.S. markets, as the Dow Jones Industrial Average closed up 0.19 percent while the tech-heavy Nasdaq index ended 0.36 percent lower overnight.
With many large-cap tech stocks showing weakness, mid-sized to small electronics stocks were targeted by bargain hunters, and rotational buying lifted certain old economy stocks to help the broader market close higher, dealers said.
"Investors at home and abroad were holding their breath ahead of Powell's upcoming speech," Concord Securities analyst Kerry Huang said.
"Global equity markets are waiting for the Fed chief's comments to get a better idea of how the U.S. central bank will adjust its monetary policy.
"Taipei was not the only market that moved in a conservative direction. Wall Street and other regional markets acted that way as well before Powell speaks," Huang said.
Amid escalating trade tensions between the United States and China, global financial markets are widely anticipating that the Fed will cut its key interest rates again in September after a cut seen in July.
"Now at issue is how fast the rate-cut cycle will be phased in down the road," Huang said.
The analyst said it was no surprise that investors stayed away from market heavyweights Friday and rotated to mid-sized tech stocks, in particular in the memory chip industry.
Among the large cap tech stocks, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, closed unchanged at NT$254.00, off an earlier high of NT$254.50.
iPhone assembler Hon Hai Precision Industry Co. fell 0.51 percent to end at NT$73.30, and Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., dropped 0.51 percent to end at NT$3,915.00.
"With the three heavyweights in the doldrums, the weighted index had no choice but to move in a narrow range throughout the session on moderate turnover. It was a quiet trading session," Huang said.
The electronics sector closed down 0.07 percent, while the semiconductor sub-index ended up 0.03 percent.
The memory chip segment beat the electronics sector and the broader market after Simon Chen, chairman of ADATA Technology Co., one of Taiwan's leading dynamic random access memory (DRAM) module suppliers, said Thursday he was upbeat about the memory chip market in the second half of this year, dealers said.
Among the memory chip stocks, ADATA Technology rose 1.85 percent to close at NT$49.60, and Winbond Electronics Inc. jumped 5.42 percent to end at NT$17.50.
The old economy and financial sectors benefited from the reluctance to back large-cap electronics stocks, dealers said.
Among the old economy stocks, food brand Uni-President Enterprises Corp. rose 0.79 percent to close at NT$76.50, Taiwan Cement Corp. gained 0.92 percent to end at NT$38.20, and Formosa Plastics Corp. added 1.19 percent to close at NT$93.40.
In the financial sector, which closed up 0.39 percent, Cathay Financial Holding Co. rose 1.01 percent to end at NT$39.85, while Fubon Financial Holding Co. closed unchanged at NT$43.10.
"Investors are very concerned about the yuan's movement," Huang said. "A falling yuan is sending ripples throughout the currency markets in the region amid rising fears of a currency depreciation war, which could turn many foreign investors away from non-U.S. dollar denominated assets, which would be very negative for stocks."
According to the TWSE, foreign institutional investors sold a net NT$882 million in shares Friday.