Taiwan shares end up but gains capped

Taipei, Shares in Taiwan closed higher Thursday in reflection of a rally enjoyed by U.S. markets overnight, but the gains were capped as some investors shifted to the sell side to pocket their profits, dealers said.

Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, came off its earlier highs on profit taking to end lower due to its high valuation, which limited the upturn on the broader market, the dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 72.02 points, or 0.44 percent, at 16,287.84, after moving between 16,264.61 and 16,410.02. Turnover totaled NT$325.61 billion (US$11.48 billion).

The market opened up 0.30 percent and rose to the day's high at around 10 a.m. as buying was triggered by an all-time high on the Dow Jones Industrial Average, which rose 0.6 percent to top the 33,000- point mark for the first time Wednesday after the U.S. Federal Reserve decided to leave its key interest rates unchanged, the dealers said.

However, with the Taiex breaching 16,400 points at one point, some profit taking set in, focusing on semiconductor stocks such as TSMC, which forced the main board to give up part of its earlier gains by the end of the session, they said.

"Judging from today's movement, it seems that there have been high technical barriers ahead of 16,400 points, although the Fed appeared more dovish than expected," Concord Securities analyst Kerry Huang said, referring to the U.S. central bank's expectations of no interest rate hikes through 2023.

"As TSMC moved in consolidation mode, turnover was moderate and the upturn on the Taiex was also limited," Huang said. "Unless turnover expands to NT$330 billion-NT$350 billion, it will not be easy for the Taiex to surmount the stiff technical resistance."

TSMC, which went ex-dividend Wednesday and continued to fail to return to the previous ex-dividend level Thursday, lost 0.33 percent to close at NT$602.00, off a high of NT$609.00. "The stock could see some technical support at around NT$600.00 following the consolidation," Huang said.

Led by TSMC, other semiconductor heavyweights also trended lower. Among them, United Microelectronics Corp., a smaller contract chipmaker, fell 1.98 percent to end at NT$47.05, while integrated circuit designer MediaTek Inc. dropped 0.55 percent to close at NT$903.00.

"While these large cap semiconductor stocks stayed in the doldrums, buying was seen among downstream electronics stocks, lending some support to the electronics sector as well as the broader market," Huang said.

iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market capitalization, led the entire electronics sector, moving up 2.78 percent to close at NT$129.50. Pegatron Corp., a smaller iPhone assembler, also gained 2.77 percent to end at NT$74.30.

The PC sector also attracted strong buying, with Asustek Computer Inc. soaring 10 percent, the maximum daily increase, to close at NT$358.00, and rival Acer Inc. rising 2.90 percent to end at NT$28.40 on the back of their 2020 results and cash dividend proposals.

Huang said the bellwether electronics sector, which rose 0.58 percent, continued to dominate the Taiex, while old economy and financial stocks mostly ended mixed.

In the property sector, which fell 0.22 percent on the government's latest measures to rein in home price speculation, Farglory Land Development Co. fell 0.74 percent to close at NT$53.70, and Highwealth Construction Corp. ended unchanged at NT$48.20.

Shipping stocks continued to move higher on rising freight rates, with Evergreen Marine Corp., the largest shipping company in Taiwan, up 3.87 percent to close at NT$41.65 and Yang Ming Marine Transport Corp. up 1.92 percent to end at NT$31.90.

In the financial sector, which lost 0.11 percent, Fubon Financial Holding Co. lost 0.18 percent to close at NT$54.40 and Cathay Financial Holding Co. fell 0.76 percent to end at NT$45.45.

"Investors should keep a close eye on the movement of the benchmark 10-year U.S. treasury yields. When yields spike, tech stocks with high valuations will suffer," Huang said.

According to the TWSE, foreign institutional investors bought a net NT$10.81 billion-worth of shares on the main board Thursday.

Source: Focus Taiwan News Channel