Taiwan shares end higher, capped by 9,000-point barrier

Shares in Taiwan moved higher Thursday, but the gains were capped by strong technical resistance ahead of the psychological 9,000-point mark, with low trading volume, dealers said.

Market sentiment remained cautious after massive foreign institutional selling, while a congressional testimony by U.S. Federal Reserve Chair Janet Yellen scheduled for later in the day also kept many investors from jumping onto the trading floor, as they were awaiting more clues about the Fed's monetary policy, the dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE) closed up 33.04 points, or 0.37 percent, at 8,995.26, after moving between 8,936.30 and 8,998.23, on turnover of NT$63.58 billion (US$1.20 billion).

The market opened up 0.25 percent on follow-through buying from a session earlier, led by the bellwether electronics sector, as investors took hints from a 0.36 percent increase on the tech-heavy NASDAQ index and a 1.14 percent surge in the Philadelphia Semiconductor index in the U.S. market overnight, the dealers said.

The weighted index then kept moving in a narrow range for the rest of the session amid fears of a possible correction ahead of 9,000 points, while buying in the latter part of the session in large-cap high-tech stocks, such as contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???) and iPhone and iPad assembler Hon Hai Precision Industry Co. (??), helped to stabilize the broader market by the end of the session, they said.

"It was a quiet session without any big movement in share prices, as the upturn was capped by stiff technical barrier ahead of 9,000 points," Concord Securities analyst Kerry Huang said. "Turnover was slim, making it unlikely for the main board to make any breakthrough for the moment."

Huang said there have been fears that foreign institutional investors would continue to cut their holdings in the local equity market after investors witnessed massive net foreign institutional selling. According to the TWSE, foreign institutional investors sold a net NT$92.30 billion-worth of shares on the main board during the Nov. 1-16 period.

"With the yield of the U.S. treasure rising, foreign investors have sold their assets in Taiwan, but have parked their funds in U.S. dollar-denominated assets, which has made many investors worried," Huang said.

Fortunately, he said, select large-cap stocks in the bellwether electronics sector served as an anchor that stabilized the broader market, with the electronics sub-index up 0.56 percent and the semiconductor sub-index up 0.82 percent at the close.

Among the gaining high-tech stocks, TSMC, the most heavily weighted stock in the local market, rose 0.83 percent to close at NT$181.50, with 22.43 million shares changing hands, and Hon Hai, the world's largest contract electronics maker, added 2.03 percent to end at the day's high of NT$80.60.

Flat panel maker AU Optronics Corp. (??) rose 2.19 percent to close at NT$11.65 after a high-end low-temperature poly-silicon screen plant located in China's Kunshan began commercial production the previous day.

In the non-high-tech sector, Formosa Plastics Corp. (??) rose 0.82 percent to end at NT$86.20, Nan Ya Plastics Corp. (??) gained 1.07 percent to close at NT$65.90, and Eclat Textile Co. (??) added 4.26 percent to end at NT$318.50.

"Investors had better stay alert about a possible rate hike by the Fed, which could lead to more fund outflows," Huang said. "Yellen's planned congressional testimony should be closely watched for clues about the central bank's monetary policy, and her comments on inflation will be also critical to a rate hike cycle."

Source: Focus Taiwan News Channel