Taiwan shares close up on liquidity-driven buying

Taipei--Shares in Taiwan closed higher Tuesday, the last trading session of the Year of the Monkey, as the market remained driven by ample liquidity, with foreign investors continuing to move funds into the local market, dealers said.

Buying focused on select large-cap stocks, in particular smartphone camera lens supplier Largan Precision Co. (???), as well as shares in the petrochemical sector, which pushed up the weighted index after the local main board breached the 9,400-point mark on Monday, the dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE) ended up 23.90 points, or 0.25 percent, at 9,447.95, after moving between 9,416.06 and 9,468.34, on turnover of NT$84.925 billion (US$2.696 billion).

The market opened down one point and fell to the day's low on a mild technical correction from a 0.99 percent increase seen a session earlier, as investors took cues from a lackluster Wall Street, where the Dow Jones Industrial Average fell 0.14 percent and the S&P 500 Index lost 0.27 percent overnight, the dealers said.

But buying on the local main board reemerged at around 9:15 a.m. as investors picked up certain market heavyweights, helping the weighted index return to positive territory on the back of a stronger Taiwan dollar at a time when foreign investors continued to remit funds into Taiwan, they said.

For the Year of the Monkey on the lunar calendar, which will end on Jan. 27, the weighted index soared 1,384.95 points. The local equity market will close between Wednesday and Feb. 1.

Feb. 2 will be the first trading session for the Year of the Rooster.

"It was a liquidity-driven session today as the U.S. dollar weakened, prompting foreign investors to move funds into the region amid fears that U.S. President Donald Trump's trade protectionism will push down the greenback," Mega International Investment Services Corp. analyst Alex Huang said.

"But the room for the gains was limited, since there has been strong technical resistance ahead of the 9,500-point mark," Huang said.

"Today's expanded turnover shows that some investors appeared willing to buy, while some others rushed to cut their holdings amid uncertainty over the global economy after Trump took power."

Huang said that cautious market sentiment reflected worries about possible negative leads emerging during the Lunar New Year holiday, referring to an upcoming policymaking meeting scheduled by the U.S. Federal Reserve for Jan. 31-Feb. 1 and an investor conference planned by Apple Inc. for Jan. 31.

"More importantly, after Trump signed an executive order Monday to withdraw from the Trans-Pacific Partnership, many investors have been anxious about what next will come from the new U.S. administration," Huang said.

Huang said that Largan, a supplier to Apple, continued to move higher, serving as a driver to the market's gains Tuesday. Largan is one of the favorites of foreign institutional investors, and only institutional investors can afford to buy the most expensive stock in Taiwan.

Largan rose 2.18 percent to close at NT$4,450.00 after a 0.8 percent increase seen on Monday.

Also in the high-tech sector, integrated circuit packaging and testing services provider Advanced Engineering Inc. (???) gained 1.78 percent to end at NT$34.30, and contract chip maker Taiwan Semiconductor Manufacturing Co., the most heavily weighted stock in the local market, added 0.27 percent to close at NT$185.50.

Among the gaining old economy stocks, Formosa Petrochemical Corp. (???) rose 0.47 percent to end at NT$106.50, and Formosa Plastics Corp. (??) added 0.50 percent to close at NT$90.20.

"Whether the weighted index will challenge 9,500 points will depend on whether strong foreign investors will continue to buy aggressively here," Huang said.

According to the TWSE, foreign institutional investors bought a net NT$12.31 billion-worth of shares on the main board Tuesday.

Source: Focus Taiwan News Channel