Taiex edges up to new high despite cautious sentiment

Taipei, March 14 (CNA) Shares in Taiwan inched up Thursday to close at a new high, after recovering from early losses in the bellwether electronics sector, even as sentiment remained cautious ahead of the United States' release of its February producer price index (PPI) later in the day, dealers said.

The financial sector was the main anchor, helping to stabilize the market as some financial firms offered attractive dividend policies, and buying also rotated to some old economy stocks, giving the main board additional support, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 9.41 points, or 0.05 percent, at 19,937.92, after moving between 19,775.50 and 19,995.51. Turnover totaled NT$473.97 billion (US$15.05 billion).

The market opened down 7.88 points and soon dipped to the day's low, led by large-cap semiconductor stocks, following a 2.47 percent drop of the Philadelphia Semiconductor Index and a 0.54 percent fall of the tech-heavy Nasdaq index on the U.S. markets overnight, dealers said.

However, by the end of the session, the broader market had bounced back to positive territory, boosted by IC heavyweights such as application-specific integrated circuit (ASIC) designer Alchip Technologies Ltd., the most expensive stock on the local market, and contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock here, dealers added.

"Lingering concerns over the next move by the U.S. Federal Reserve continued to haunt investor sentiment at home and abroad," Capital Investment Management analyst Liao Chien-yu said.

"Investors remained cautious ahead of the release of the PPI and the U.S. Federal Reserve's policymaking meeting," which is scheduled for March 19-20, he said.

Early in Thursday's session, the electronics sector came under pressure, although some large-cap semiconductor stocks had recently led the broader market on a rise to challenge the 20,000 point mark, Liao said.

"Fortunately, Alchip made a strong comeback in the mid-morning session Thursday, rebounding from its earlier slump, which helped to boost market sentiment and led to buying in other semiconductor stocks," he said.

AIchip soared by 10 percent, the maximum daily increase, to close at NT$3,750.00, after hitting a low of NT$3,385.00.

"TSMC followed suit, with buying by bargain hunters accelerating late in the trading session, which gave the broader market an additional boost," Liao said. "TSMC's American depositary receipts on the U.S. market represent a premium of 15-17 percent over the price in Taiwan, so the stock has been seeing strong technical support on the local market."

TSMC rose 0.64 percent to end at NT$784.00, after coming off a low of NT$770.00, and its gains boosted the Taiex by more than 40 points Thursday.

Some semiconductor stocks underperformed the broader market, including smartphone IC designer MediaTek Inc. -- second only to TSMC in terms of market value -- which lost 5.75 percent to close at NT$1,150.00.

IC packaging and testing services provider ASE Technology Holding Co. also dropped, falling 2.84 percent to end at NT$154.00.

"MediaTek's losses offset TSMC's rebound," Liao said.

Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. rose 0.41 percent to close at NT$121.00, coming off a low of NT$117.00, while power management solution provider Delta Electronics Inc. shed 1.27 percent to end at NT$310.50.

"With many tech stocks in the doldrums, investors rushed to find targets in the financial sector to park their funds," Liao said. "Investors have been impressed by the dividend payout policies and the improved profitability in that sector."

The financial index rose 1.86 percent Thursday, recording its ninth straight session of growth.

Taiwan Business Bank surged 10 percent to close at NT$16.55, after announcing that it would pay NT$1.35 in dividend per share, the highest since 2000 when it paid NT$2.00.

Cathay Financial Holding Co., which posted a 378 percent annual growth in net profit to NT$20.39 billion for the January-February period, gained 3.21 percent to end at NT$48.30.

Hua Nan Financial Holding Co. rose 2.93 percent to close at NT$22.80, and Yuanta Financial Holding Co. ended up 2.71 percent at NT$30.30.

"Some old economy stocks, in the textile industry in particular, also rode the wave of improving profitability," Liao said. "Electric machinery stocks continued to benefit from large investments by the government to improve the electricity grid networks around Taiwan."

The textile index rose 1.89 percent, with Makalot Industrial Co. soaring 6.00 percent to close at NT$397.50 and Eclat Textile Co. rising 3.39 percent to end at NT$579.00.

In the electric machinery sector, which rose 1.59 percent, Fortune Electric Co. jumped 10 percent to close at NT$634.00, and Shihlin Electric & Engineering Corp. rose 4.51 percent to end at NT$208.50.

"Before the Fed meeting, the Taiex is expected to move in consolidation," Liao said. "Buying will be capped, as investors eagerly await the American central bank's comments, hoping to gain some clues about when a rate cut cycle might start."

According to the TWSE, foreign institutional investors bought a net NT$488 million worth of shares on the main board Thursday.