Taiwan shares end up, gains capped ahead of 9,400 points

Shares in Taiwan moved higher Friday as momentum extended from a session earlier, but gains were limited ahead of stiff technical resistance at around 9,400 points, dealers said.

Buying in financial and old-economy stocks helped the broader market move higher, while the bellwether electronics sector took a pause after a significant rebound seen a session earlier, the dealers said.

Reduced turnover revealed cautious sentiment before the U.S. Federal Reserve holds its next policymaking meeting scheduled for next week for more clues about how the U.S. central bank will adjust its monetary policy, they added.

The weighted index on the Taiwan Stock Exchange closed up 16.82 points, or 0.18 percent, at 9,392.68, after moving between 9,366.86 and 9,399.25, on turnover of NT$76.76 billion (US$2.41 billion).

The market opened up 7.21 points in a knee-jerk reaction to another fresh high on Wall Street, where the Dow Jones Industrial Average rose 0.33 percent and the S&P 500 index gained 0.22 percent overnight after the European Central Bank announced an extension of its asset buying program, the dealers said.

The weighted index fell into consolidation mode for the rest of the session, with many investors afraid of strong technical barriers ahead of 9,400 points, which pushed down trading volume on Friday and confined movement of large-cap high-tech stocks such as contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC,台積電), they said.

“Without turnover hitting NT$90 billion, it was unlikely for the weighted index to stand above the 9,400 point level for the moment,” KGI Securities analyst Phil Chu said. “After yesterday’s rally, many investors preferred to remain cautious with the index approaching that level.”

Chu said that investors in the local equity market were acting prudently before the Fed kicks off its next two-day policymaking meeting on Dec. 13, its last for 2016.

“While the global financial markets have widely anticipated that the Fed will raise its key interest rates in the meeting, investors simply want to hear the central bank’s comments on the economic climate to calculate how the Fed will continue its rate hike cycle next year,” Chu said.

Due to the reduced turnover, the bellwether electronics sector ended up only 0.06 percent after a 1.39 percent rally seen a session earlier, the dealers said.

TSMC, the most heavily weighted stock in the local market, rose 0.27 percent to close at NT$186.00, with 24.87 million shares changing hands, and integrated circuit designer MediaTek Inc. (聯發科) rose 0.22 percent to end at NT$230.50.

Bucking the upturn on the broader market, IC packaging and testing services provider Advanced Semiconductor Engineering Inc. (日月光) fell 1.01 percent to close at NT$34.15 after the company announced that it will issue new shares and sell unsecured straight bonds to raise NT$18 billion to cut its debts.

“The non-high-tech sector served as an anchor to stabilize the broader market, while the electronics sector was slow today,” Chu said. “Since foreign institutional investors still held a great number of long-position futures contracts, I do not think that they wanted to see a slump in the spot market.”

According to the TWSE, foreign institutional investors bought a net NT$8.18 billion-worth of shares on the main board Friday after a net buy of NT$12.59 billion recorded the previous day.

In the financial sector, which closed up 0.35 percent on the back of late-session buying, Yuanta Financial Holding Co. (元大金) rose 1.69 percent to end at NT$12.00, Mega Financial Holding Co. (兆豐金) gained 1.06 percent to close at NT$23.75, and Cathay Financial Holding Co. (國泰金) added 0.71 percent to end at NT$49.40.

Source: Focus Taiwan News Channel

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