Taiwan shares close flat

Shares in Taiwan closed little changed Tuesday as investors had little incentive to trade, leaving the broader market in consolidation mode throughout the session, dealers said.

While select large-cap electronics stocks, such as Taiwan Semiconductor Manufacturing Co. (TSMC, ???) and smartphone camera lens supplier Largan Precision Co. (???), came under pressure, the financial sector, attracted buying to lend support to the index, they said.

The weighted index on the Taiwan Stock Exchange edged up 0.39 points to close at 9,110.56, after moving between 9,093.87 and 9,134.37, on turnover of NT$$68.98 billion (US$2.18 billion).

The market opened up 3.17 points and rose to the day's high following gains overnight on Wall Street, where the Dow Jones Industrial Average closed up 0.58 percent and the S and P 500 index ended up 0.52 percent, dealers said.

With the index moving closer to the 9,200-point mark, selling emerged, focusing on high-tech heavyweights as investors locked in gains they had built in recent sessions.

But the resilient financial sector benefited from relatively low valuations to move higher and keep the broader market above the previous day's close at the end of the session, they said.

"It was another slow day," Mega International Investment Services Corp. analyst Alex Huang said. "Although the market initially rose today in line with Wall Street, many investors remained reluctant to chase prices, so there was mostly consolidation."

After accounting for the impact of a possible rate hike by the U.S. Federal Reserve following a speech made by Fed Chair Janet Yellen, "investors were seeking more incentives to trade. Before any new driver comes up, they are opting to stay on the sidelines," Huang said.

In a speech delivered at a meeting of global central bankers on Friday, Yellen said the U.S. economy has been improving and that "the case for an increase in the federal funds rate has strengthened in recent months."

Her comments sparked selling in the Taiwan dollar on Monday, but the local currency rebounded Tuesday as currency traders turned calm.

"Yellen's remarks failed to give a clear clue about when the Fed will raise its key interest rates, and now, investors are simply waiting for more economic data to determine their investment strategies," Huang said, referring to U.S. job data due on Friday.

Huang said that with the market lacking momentum, the bellwether electronics sector fell back and finished 0.22 percent lower at the close.

TSMC, the most heavily weighted stock in the local market, fell 1.13 percent to close at NT$174.50. Largan, a supplier to Apple Inc., lost 0.83 percent to end at NT$3,585.00 but remained the most expensive stock in Taiwan.

Hon Hai Precision Industry Co. (??), an assembler of iPhones and iPads for Apple, lost 0.34 percent to close at NT$89.00, while integrated circuit designer MediaTek Inc. (???) gained 1.84 percent to end at NT$249.00.

"The silver lining in the market was that the financial sector posted gains largely on bargain hunting," Huang said.

"Buying in financial stocks showed investors' hopes that insurance firms will help their parent companies book handsome cash dividends into their results for the third quarter," Huang said.

In the financial sector, which closed up 0.92 percent, Fubon Financial Holding Co. (???), which owns Fubon Life Insurance (????), rose 3.60 percent to end at NT$44.55, and Cathay Financial Holding Co. (???), which controls Cathay Life Insurance, gained 2.65 percent to close at NT$40.65.

Source: Focus Taiwan