Taiwan shares edge higher on low turnover; Largan rebounds

Shares in Taiwan closed slightly higher on Tuesday after moving into consolidation mode as investors took to the sidelines, pushing down turnover and offering only limited room for large-cap stocks to rise, dealers said.

Sentiment remained cautious ahead of a news conference scheduled for Wednesday by U.S. President-elect Donald Trump, who advocated protectionism during his campaign. The financial market is waiting for further indications as to the incoming U.S. President's economic policy, after his inauguration on Jan. 20, they said.

In addition, many investors decided to wait for fourth quarter results from last year and guidance for the current quarter during the on-going earnings season at home and on Wall Street, they added.

Smartphone camera lens supplier Largan Precision Co. (???) staged a technical rebound from a slump on Monday, when trading in the stock was automatically suspended for a couple of minutes, a total of 22 times, after its volatility triggered a price stabilizing mechanism on the main board.

The weighted index on the Taiwan Stock Exchange (TWSE) closed up 7.22 points, or 0.08 percent, at 9,349.64, after moving between 9,319.45 and 9,353.60 on turnover of NT$59.71 billion (US$1.87 billion).

The market opened up 1.77 points on a mild technical rebound after a 0.32 percent fall the previous session, but then fell before bargain hunting became more visible in the late trading session lifting select market heavyweights which also helped the broader market close in positive territory at the end of trading, dealers said.

"It was another boring session today. Judging from the low turnover, I think both foreign and local investors were reluctant to trade," Mega International Investment Services Corp. analyst Alex Huang said.

"Many investors are anxiously waiting for Trump to speak at the news conference to get a better picture of his economic policy which could impact the global economy," Huang said.

According to the TWSE, foreign institutional investors remained on the buy side on Tuesday, recording net purchases of NT$3.28 billion on the main board.

"Thanks to Largan, the broader market closed above the previous closing level today. But, such thin turnover capped the room for the broader market to move higher, never mind overcome the technical resistance ahead of 9,400 points," Huang said.

Largan, the most expensive stock in Taiwan, rose 3.12 percent to close at NT$4,135.00 after a 3.26 percent fall on Monday, when trading was stopped briefly 22 times in the early morning session after a price stabilizing mechanism was triggered.

According to the TWSE, the exchange's price stabilizing mechanism identified irregularities in trading orders involving Largan shares, which led to the multiple trading suspensions. The exchange has launched an investigation into the incident to determine whether there was any attempt to manipulate the market.

Also in the electronics sector, which ended up 0.18 percent, shares in Hon Hai Precision Industry Co. (??), an assembler of iPhones and iPads for Apple Inc., rose 0.60 percent to end at NT$84.00 on the back of bargain hunting, while contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???), the most heavily weighted stock on the local market, closed unchanged at NT$184.00.

Large cap financial stocks were also supported in late session buying, dealers said. Among them, shares in Fubon Financial Holding Co. (???) rose 0.58 percent to close at NT$52.00 and Cathay Financial Holding Co. (???) gained 0.41 percent to end at NT$49.20.

"What TSMC and Largan say at their investor conferences scheduled for Thursday is expected to dictate the movement of the local market. That's why investors appeared reluctant to act now," Huang said.

"In particular, the market wants to hear TSMC's comments on the first quarter, traditionally a slow season for the global semiconductor industry," Huang said. TSMC is the largest contract chip maker in the world.

Source: Focus Taiwan News Channel