Taipei-Shares in Taiwan closed slightly higher Monday as large-cap high-tech stocks remained in consolidation mode ahead of stiff technical resistance at around 10,600 points, dealers said.
Bucking the doldrums suffered by major electronics stocks, second-tier optoelectronics stocks steamed ahead on rotational buying to lend support to the broader market, and gains by the financial sector on bargain hunting also gave the market a boost, they said.
The weighted index on the Taiwan Stock Exchange closed up 10.47 points, or 0.10 percent, at 10,525.98, after moving between 10,498.88 and 10,542.37, on turnover of NT$112.846 billion (US$3.5 billion).
The market opened down 0.12 percent on a technical correction and fell further to below 10,500 points amid pressure on large-cap electronics stocks after the Dow Jones Industrial Average and the Nasdaq finished relatively flat on Friday, dealers said.
Bargain hunters then emerged to push the broader market back into positive territory as the non-high-tech sector posted gains, but the market then moved in a narrow range over the rest of the session as concerns of possible volatility on Wall Street lingered, they said.
"Valuations on U.S. markets have been high, and it seems like Wall Street has hit a bottleneck, making a breakthrough any time soon unlikely," Xincheng International Investment Consultant analyst Chang Chih-cheng said.
"Due to the high correlation between Taiwan's market and Wall Street, investors here are afraid of volatility among U.S. stocks down the road, which could affect the local stock market," Chang said.
"As a result, many investors were reluctant to chase prices today, limiting the day's gains ahead of major technical hurdles at around 10,600 points."
Chang said the local electronics sector remained slow, with large-cap stocks failing to move higher as investors pocketed gains built in recent sessions.
Among the major electronics stocks, TSMC, the most heavily weighted stock in the local market, fell 0.69 percent to close at NT$216.00, with 15.21 million shares changing hands.
iPhone and iPad assembler Hon Hai Precision Industry Co. (??), second to TSMC in terms of market capitalization, dropped 0.43 percent to end at NT$115.50, and Largan Precision Co. (???), a smartphone camera lens supplier to Apple Inc., shed 2.92 percent to close at NT$5,825.00.
"Unless these major high-tech stocks return to a growth trend and score significant gains, it will not be easy for the weighted index to overcome technical resistance ahead of 10,600 points any time soon," Chang said.
After selling electronics heavyweights, foreign institutional investors were net sellers of NT$1.72 billion in shares on the stock exchange Monday.
Second-tier optoelectronics stocks outperformed the broader market, however. Kinko Optical Co. (???) rose 10 percent, the maximum daily increase, to close at NT$42.15, and Genius Electronic Optical Co.(???) gained 6.86 percent to end at NT$475.00.
"Many investors have turned upbeat about second-tier optoelectronics stocks on hopes of strong sales. But I'd prefer to see the real numbers. The current gains are kind of speculative," Chang said.
In the financial sector, which closed up 0.73 percent, Mega Financial Holding Co. (???) rose 0.63 percent to end at NT$24.10, Cathay Financial Holding Co. (???) added 1.04 percent to close at NT$48.70, and Fubon Financial Holding Co. (???) gained 1.58 percent to end at NT$48.25.
Source: Focus Taiwan News Channel