Taiex edges up after hitting intraday high of over 20,100 points

Taipei, March 13 (CNA) Shares in Taiwan closed slightly higher on profit taking Wednesday as investors shifted to the sell side after seeing the main board hit a fresh intraday high of more than 20,100 points, dealers said.

Market sentiment turned cautious due to higher than expected U.S. February inflation data, which created more uncertainties about when and how the Federal Reserve will start its rate cut cycle, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 13.96 points, or 0.07 percent, at 19,928.51, after moving between 19,866.73 and 20,112.81. Turnover totaled NT$538.20 billion (US$17.09 billion)

The market opened up 0.55 percent and rose to the day's high, up about 200 points in the early morning session as buying focused on large cap electronics stocks, in particular contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), and iPhone assembler Hon Hai Precision Industry Co., dealers said.

With the Taiex topping 20,100 points, selling emerged, eroding part of the early gains enjoyed by TSMC and Hon Hai, and also pushing down select old economy heavyweights, while the financial sector's gains were sustained by bargain hunting which stabilized the broader market by the end of the session, dealers added.

"Judging from today's market movement, technical hurdles remain high ahead of 20,000 points," Cathay Futures Consultant analyst Tsai Ming-han said.

On March 8, the Taiex topped 20,000 points for the first time when it hit 20,065.50, the highest ever level, but came off the high to close at 19,785.32.

"It seems that many investors just want to lock in profits for the moment amid lingering concerns about the Fed's next move in particular after the release of the higher than expected February consumer price index (CPI) growth overnight," Tsai said.

Tsai said after the February CPI data, the U.S. dollar strengthened, which could pave the way for funds to exit the region, the last thing equity investors want to happen.

The U.S. CPI rose 3.2 percent from a year earlier in February, compared with an earlier market estimate of 3.1 percent, remaining above the 2 percent alert set by the American central bank.

"Fortunately, TSMC and Hon Hai stayed resilient, while coming off their highs, which prevented the Taiex from falling into negative territory," Tsai said.

The two stocks moved higher on the back of gains on the U.S. markets, where the tech-heavy Nasdaq index rose 1.12 percent, and the Philadelphia Semiconductor Index gained 2.09 percent, according to Tsai.

TSMC, the most heavily weighted stock, rose 1.17 percent to close at NT$779.00 after hitting a high of NT$785.00. TSMC's gains represented roughly a 70 point increase on the Taiex, and sent the electronics index and the semiconductor sub-index up by 0.06 percent and 0.54 percent, respectively.

Hon Hai, also known as Foxconn internationally, which is the No. 3 stock in terms of market value in Taiwan, gained 1.26 percent to end at NT$120.50 after hitting NT$123.50.

Other large cap tech stocks appeared mixed with United Microelectronics Corp. (UMC), a smaller contract chipmaker, up 0.95 percent to close at NT$53.00, while smartphone IC designer MediaTek Inc. ended unchanged at NT$1,215.00.

In addition, AI server maker Quanta Computer Inc. lost 1.57 percent to close at NT$250.50, rival Wistron Corp. shed 4.90 percent to end at NT$116.50, and Asia Vital Components Co., a supplier of cooling solutions to tech gadgets, fell 4.04 percent to close at NT$617.00.

Giga-Byte Technology Co., a leading graphics card vendor for AI applications, plunged 7.61 percent to end at NT$328.00.

The financial sector also served as an anchor stabilizing the broader market Wednesday, up 1.07 percent, Tsai said, adding that "many financial stocks have lagged far behind the broader market and their tech counterparts, attracting bargain hunters."

In the financial sector, CTBC Financial Holding Co. rose 4.60 percent to close at NT$31.85, Yuanta Financial Holding Co. gained 2.08 percent to end at NT$29.50, China Development Financial Holding Co. added 1.47 percent to close at NT$13.80, and Mega Financial Holding Co. ended up 1.13 percent at NT$40.40.

"The Taiex's earlier gains also paved the path for profit taking by select old economy stocks during most of the session," Tsai said.

In the petrochemical industry, which lost 1.55 percent, Nan Ya Plastics Corp. shed 1.94 percent to close at NT$55.60, Formosa Chemicals & Fibre Corp. dropped 1.44 percent to end at NT$54.90, Formosa Plastics Corp. lost 1.30 percent to close at NT$68.40, and Formosa Petrochemical Corp. ended down 0.56 percent at NT$70.70.

Bucking the downturn, Shihlin Electric & Engineering Corp. soared 10 percent, the maximum daily increase, to close at NT$199.50, and Chung-Hsin Electric & Machinery Manufacturing Corp. gained 2.06 percent to end at NT$173.50 amid optimism over Taiwan Power Co.'s massive investment to improve the country's electricity grid networks.

"Although the Taiex failed to close above 20,000 points again today, its uptrend potential remains unchanged. What it needs is more time to digest heavy downward pressure ahead of that level," Tsai said.

"Before the next policymaking meeting scheduled by the Fed for next week which will give more clues about how the American central bank will adjust its policy, the local market is expected to continue in consolidation mode," Tsai added.

The Fed's meeting will be held from March 19-20 (U.S. time).

According to the TWSE, foreign institutional investors bought a net NT$6.98 billion worth of shares on the main board Wednesday.