Taiwan shares end up but gains capped amid inflation worries

Taipei, Oct. 14 (CNA) Shares in Taiwan closed higher Thursday but the gains were limited by strong technical resistance after the main board breached 16,500 points at one point, dealers said.

Fears over growing inflationary pressure prevented many investors from chasing prices despite the initial upturn in the index after the United States reported a 5.4 percent year-on-year increase in the consumer price index (CPI) for September, they said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 39.29 points, or 0.24 percent, at 16,387.28, after moving between 16,347.88 and 16,519.96. Turnover totaled NT$256.35 billion (US$9.12 billion).

The market opened up 0.27 percent and soon moved to the day's high and topped 16,500 points in the early morning session before selling followed, pushing the Taiex into negative territory before noon with the tech sector seeing its earlier upturn eroded somewhat, dealers said.

In the afternoon session, shipping stocks started to pick up and pushed the broader market back into positive territory, but the gains on the main board as a whole were capped by last ditch selling, dealers added.

"It appeared there were high technical hurdles ahead of 16,500 points. It was no surprise that the willingness to chase prices was low," Hua Nan Securities analyst Kevin Su said.

"Many local investors simply seized on the latest CPI growth in the U.S. as an excuse to lock in their earlier gains amid growing fears that the Federal Reserve will move at a faster pace to take back funds from the market," Su said.

The minutes of its September policymaking meeting released Wednesday imply the Fed could start to downsize its asset purchases as soon as November.

"The tech sector gave up part of its earlier gains as large cap stocks such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) came off its earlier high," Su said.

TSMC, the most heavily weighted stock on the local market, rose 0.35 percent to close at NT$573.00 after hitting a high of NT$579.00. The electronics index ended up 0.19 percent at 770.85 off a high of 779.38.

"While the market anticipated TSMC would give positive leads at its investor conference today, many investors remained reluctant to raise their holdings in the stock out of an abundance of caution," Su said.

After the market closed, TSMC announced that its net profit for the third quarter hit a record high of NT$156.26 billion, up 16.3 percent from a quarter earlier and also up 13.8 percent from a year earlier.

Among memory chip suppliers, which were boosted by bargain hunting to outperform the broader market due to their relatively low valuations, Nanya Technology Corp. surged 4.88 percent to close at NT$62.30, and Winbond Electronics Corp. jumped 5.00 percent to end at NT$25.20.

Apple Inc.'s suppliers came under pressure on reports that the U.S. tech giant could cut its iPhone shipments for 2021 due to a global chip shortage with Largan Precision Co., a smartphone camera lens maker, down 3.90 percent to close at NT$1,970.00.

However, shares in iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market capitalization, rose 0.95 percent to end at NT$106.50. "Hon Hai benefited from its efforts at developing electric vehicles," Su said.

The transportation sector, where many major shipping stocks are traded, staged a technical rebound, rising 2.73 percent. In the sector, container cargo shipper Wan Hai Lines Ltd. rose 6.13 percent to close at NT$164.50, and rivals Yang Ming Marine Transport Corp. and Evergreen Marine Corp. gained 4.41 percent and 2.58 percent, respectively, to end at NT$92.40 and NT$95.30.

"Other old economy stocks were mixed as investors fear a spike in inflationary pressure will hurt the global economy recovery and cut demand," Su said.

Among raw material stocks, Formosa Plastics Corp. lost 1.30 percent to close at NT$114.00, and Taita Chemical Co. fell 2.09 percent to end at NT$35.10. In addition, Tainan Spinning Co. closed unchanged at NT$20.85, while Far Eastern New Century Corp., another textile brand, lost 0.68 percent to end at NT$29.05.

In the financial sector, which lost 0.05 percent, Fubon Financial Holding Co. lost 0.13 percent to close at NT$74.40, while Cathay Financial Holding Co. rose 0.71 percent to end at NT$56.60.

"With worries over inflation on the rise, investors should continue to keep a close eye on how the U.S. benchmark 10-year treasury yield moves," Su said. "In addition, the on-going earnings season at home and in the U.S. also deserves further attention."

According to the TWSE, foreign institutional investors bought a net NT$3.43 billion worth of shares on the main board Thursday.