Taiwan shares close up, led by electronics sector

Taipei, Oct. 7 (CNA) Shares in Taiwan closed higher Monday as the electronics sector served as a driver to the latest gains on the local main board with "Apple concept stocks" in focus on the back of better than expected sales of the latest iPhones, dealers said.

However, turnover remained moderate with many investors staying on the sidelines ahead of talks between the United States and China, scheduled to start Oct. 10, amid continued worries about uncertainty over global demand and the world economy, they said.

The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex ended up 40.58 points, or 0.37 percent, at 10,935.06, after moving between 10,919.43 and 10,954.45, on turnover of NT$113.63 billion (US$3.68 billion).

The market opened up 0.35 percent to breach the 10,900 point mark on follow-though buying from the previous session with investors encouraged by a rally on Wall Street, where the Dow Jones Industrial Average closed up 1.42 percent after the August job report, dealers said.

On Friday, Washington reported the U.S. unemployment rate for August fell to a 50-year low of 3.5 percent, but the number of new job openings created in the month stood at 136,000, lower than an earlier market expectation of 145,000, which showed a possibility that the Federal Reserve will still cut interest rates.

The strength of the local main board continued as investors continued to buy into select suppliers of Apple Inc. in the wake of stronger than expected shipments of the new iPhone 11 series which went on global sale on Sept. 20, but the gains were capped by stiff technical resistance ahead of 11,000 points by the end of the session, dealers said.

"The local equity market continued to move higher today on the back of the solid upturn on Wall Street on Friday," Concord Securities analyst Kerry Huang said. "But, since valuations of local equities have been higher than their U.S. counterparts', the momentum here was shy of Wall Street's today."

"Moreover, there have been high technical hurdles ahead of 11,000 points, so it was not surprising that the upturn was limited on the local main board," Huang said, referring to the stiff technical resistance at around 10,971 points, an intraday high on Sept. 18.

Thanks to the strong sales of new iPhones, Huang said, large cap Taiwanese suppliers to Apple attracted buying throughout the session to lend support to the broader market.

Due to strong demand for the latest iPhones, shipments of Apple's smartphones could be 10 percent higher than a year earlier in the first quarter of 2020, according to a new estimate from TF Securities analyst Kuo Ming-chi, who has a good reputation for Apple related forecasts.

Among the gaining Apple concept stocks, Taiwan Semiconductor Manufacturing Co. (TSMC), a contract chipmaker, which supplies processors for iPhones, rose 0.54 percent to close at NT$278.00 after hitting a high of 279.50, with 17.47 million shares changing hands.

As TSMC is the most heavily weighted stock on the local market, the bellwether electronics sector closed up 0.58 percent, and the semiconductor sub-index ended up 0.49 percent.

Also in the Apple supply chain, shares in iPhone assembler Hon Hai Precision Industry Co. rose 0.96 percent to end at NT$73.40, Pegagtron Corp., a smaller iPhone assembler, rose 2.02 percent to close at NT$55.50, and metal casing supplier Catcher Technology Co. soared 6.48 percent to end at NT$263.00.

Bucking the upturn, shares in Largan Precision Co., a supplier of smartphone camera lenses to Apple, fell 0.22 percent to close at NT$4,480.00, but buying rotated to smaller rivals, including Genius Electronic Optical Co, which added 0.10 percent to end at NT$482.00.

Among mixed old economy stocks, EVA Airways Corp. gained 1.09 percent to close at NT$13.85, and Formosa Plastics Corp. added 0.86 percent to end at NT$94.10, while Nan Ya Plastics Corp. closed unchanged at NT$69.50, and Taiwan High Speed Rail Corp. fell 1.41 percent to end at NT$35.05.

In the financial sector, which fell 0.08 percent, Cathay Financial Holding Co. lost 0.49 percent to close at NT$40.40, and CTBC Financial Holding Co. dropped 0.24 percent to end at NT$20.55.

"Trade issues remain a major concern for many investors," Huang said. "So, investors generally stayed cautious, waiting for the outcome of the upcoming trade talks between Washington and Beijing."

According to the TWSE, foreign institutional investors bought a net NT$2.55 billion worth of shares on the main board Monday.