Taiwan shares edge higher but early gains not sustained

Taipei--Shares in Taiwan closed slightly higher Tuesday as investors locked in earlier gains before stocks faced technical resistance as they neared 9,800 points, dealers said.

While the old economy sector closed mixed, select large cap high-tech stocks, such as smartphone camera lens supplier Largan Precision Co. (???) and the world's largest contract electronics maker, Hon Hai Precision Industry Co. (??), moved higher, lending support to the broader market, they said.

The weighted index on the Taiwan Stock Exchange ended up 8.46 points, or 0.09 percent, at 9,718.78, after moving between 9,698.29 and 9,760.01, on turnover of NT$112.1 billion (US$3.64 billion).

The market opened up 0.17 percent and quickly rose to near the day's high on follow-through buying from Monday, when the weighted index closed up 0.46 percent to breach 9,700 points, dealers said.

The earlier gains largely reflected record highs for the Dow Jones Industrial Average, the S&P 500 index and the tech-heavy Nasdaq index overnight on expectations that U.S. President Donald Trump will come up with ambitious tax cuts, they said.

But as the index moved closer to 9,800 points, some selling set in, only for the market to rally again and hit the day's high just before 11 p.m.

That momentum could not be sustained, however, and the market fell into negative territory before late buying helped it climb above the previous day's close by the end of the session, they said.

"Since trading resumed after the Lunar New Year holiday, the local market had made a strong showing on the back of ample liquidity. It was not surprising that the market took a pause today, and it was technical in nature," Mega International Investment Services Corp. analyst Alex Huang said.

Before Tuesday, the weighted index had gained 262.37 points, or 2.78 percent, since trading resumed on Feb. 2 following the Lunar New Year holiday.

"Fortunately, some high-tech stocks still closed higher today to lift the weighted index by the close, although their gains were limited by profit-taking," Huang said.

"The higher turnover showed that many investors remained willing to pick up bargains when the index moved lower."

In the bellwether electronics sector, Largan, a supplier to Apple Inc., rose 0.21 percent to close at NT$4,715.00 after hitting a high of NT$4,770.00 to remain the most expensive stock in Taiwan.

Hon Hai, an assembler of iPhones and iPads, rose 0.11 percent to end at NT$90.00, off an early high of NT$90.70.

Also affected by profit-taking, contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???) closed unchanged at NT$187.50, off an early high of NT$190.00, with 45.70 million shares changing hands.

In the non-high-tech sector, China Petrochemical Development Corp. (???) shed 4.33 percent to close at NT$12.15, and Formosa Chemicals & Fibre Corp. (??) fell 0.70 percent to end at NT$99.00, while Fubon Financial Holding Co. (???) gained 1.18 percent to close at NT$51.30.

Though turnover was up, many investors here remained cautious, wanting first to hear what U.S. Federal Reserve Chair Janet Yellen had to say at a two-day hearing of the House Financial Services Committee on the U.S. economy, which was to start later in the day, they added.

"Before Yellen comments on the U.S. economy and give hints at how the Fed might adjust its monetary policy, investors tended to remain cautious for the time being," Huang said.

"In addition, investors are watching closely how Wall Street will move next after repeatedly hitting new highs."

If there are any corrections, Huang said, Taiwan's market could see some technical support ahead of 9,650 points in the short term.

Source: Focus Taiwan News Channel