Taiwan shares end flat as earlier gains eroded

Taipei, Shares in Taiwan closed little changed Thursday as investors shifted to the sell side to pocket earlier gains, pushing the main board into negative territory ahead of an investor conference scheduled by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) set to start after the market closes, dealers said.

Although TSMC and other select tech heavyweights posted gains, their upturn was eroded amid caution over the current earnings season, while selling also focused on old economy and financial stocks, undermining the high tech sector, they said.

The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex closed down 7.08 points, or 0.07 percent, at 10,835.38, after moving between 10,826.14 and 10,896.25, on turnover of NT$141.39 billion (US$4.29 billion).

The market opened up 0.24 percent and rose to the day's high before 10 a.m. on follow-through buying from a day earlier, when the Taiex ended up 0.59 percent, with local investors encouraged by a higher Wall Street, where the Dow Jones Industrial Average closed up 0.32 percent and the S&P 500 index ended up 0.22 percent overnight, dealers said.

However, as the Taiex moved closer to the 10,900-point mark, selling emerged as investors rushed to lock in gains from earlier in this and the previous session, selling large cap stocks almost across the board, which dragged the broader market down by the end of the session, they said.

"Despite the gains on Wall Street overnight, the U.S. market remained in consolidation mode, making many investors cautious," Hua Nan Securities analyst Kevin Su said.

"More importantly, before TSMC's investor conference, the most closely watched event on the local equity market, investors chose to remain prudent for the moment," Su said.

After hitting a high of NT$227.00, TSMC, the most heavily weighted stock on the local market, closed up 0.67 percent, with 39.64 million shares changing hands as investors took profits. After the market closed, TSMC announced net profit for the second quarter of NT$72.29 billion, down 19.5 percent from the first quarter, though second-quarter earnings rose 9.1 percent from a year earlier.

Ta Ching Securities analyst Andy Hsu said the results were in line with an earlier market estimate in the wake of slow season effects in the April-June period.

Also in the bellwether electronics sector, which closed up 0.26 percent, shares in iPhone assembler Hon Hai Precision Industry Co. gained 1.31 percent at NT$85.20, while memory chipmaker Nanya Technology Corp. shed 4.52 percent to end at NT$80.20 amid worries over falling DRAM prices.

Investors cut their holdings in non-high tech stocks, making it impossible for the broader market to sustain its earlier momentum, Su said.

Among falling old economy stocks, shares in Formosa Plastics Corp. fell 0.92 percent to close at NT$107.50, and Nan Ya Plastics Corp. shed 1.99 percent to end at NT$83.90 on the back of weaker international crude oil prices in recent sessions.

In the financial sector, which closed down 0.40 percent, Mega Financial Holding Co. fell 0.56 percent to end at NT$26.85, and CTBC Financial Holding Co. lost 0.97 percent to close at NT$20.40.

"Without any incentives, the Taiex is expected to continue to move in a narrow range between 10,800 and 10,900 in the short term," Su said.

According to the TWSE, foreign institutional investors bought a net NT$420 million worth of shares on the main board Thursday.

Source: Focus Taiwan News Channel