Taipei-Shares in Taiwan staged a technical rebound Tuesday, with bargain hunting focused on select high-tech stocks and old economy firms, after a period of consolidation, dealers said.
Market sentiment improved to some extent on a move by foreign institutional investors to raise their long position contracts, indicating that they were more upbeat about the spot market in the short term, dealers said.
The weighted index on the Taiwan Stock Exchange closed up 65.68 points, or 0.64 percent, at 10,392.07, after moving between 10,353.37 and 10,410.47. Turnover totaled NT$109 billion (US$3.6 billion) during the session.
The market opened up 0.26 percent and moved to the day's high as investors shrugged off a mixed Wall Street, where the Dow Jones Industrial Average closed up 0.13 percent Monday and the tech-heavy NASDAQ index dropped 0.05 percent, falling for the third straight session.
Some market heavyweights in both the high-tech and old economy sectors, such as contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???) and China Steel Corp. (??), were in focus, which helped push the weighted index above 10,400 points briefly before the close, dealers said.
"Despite the gains, the local equity market failed to get out of consolidation mode," Concord Securities analyst Kerry Huang said. "That's why it was hard for the weighted index to overcome the stiff technical resistance of 10,400 points."
He said, however, that foreign institutional investors appeared more optimistic as they added to their long position contracts in the futures market, which helped boost market sentiment.
Foreign institutional investors held about 40,000 more long position futures contracts than short position ones as of Monday, up about 5,000 from Aug. 16 when the August futures contracts were settled, according to Huang. Since then, the local futures market has stabilized, he said.
On Tuesday, the bellwether electronics sector closed up 0.86 percent, with TSMC, the most heavily weighted stock on the local market, gaining 1.42 percent to end at NT$214.50 and 14.19 million shares changing hands.
Largan Precision Co. (???), a smartphone camera lens supplier to Apple Inc., rose 0.72 percent to close at NT$5,605.00, while Hon Hai Precision Industry Co. (??), an iPhone and iPad assembler, ended unchanged at NT$115.00.
In the second-tier optoelectronics segment, Genius Electronic Optical Co.(???) rose 10 percent, the maximum daily increase, to close at NT$407.00, and Asia Optical Co.(??) gained 8.61 percent to end at NT$113.50.
"The gains by these second-tier optoelectronics stocks showed that local retail investors were more willing to buy,' Huang said. "It was a positive indicator for the main board."
In the steel sector, which closed 2.50 percent higher on the back of rising iron ore prices, Tung Ho Steel Enterprise Corp. (??) added 0.84 percent to end at NT$24.00. China Steel, the largest steel maker in Taiwan, rose 3.04 percent to finish at NT$25.40.
"Not many investors at home or abroad are willing to chase prices before the annual conference of world central bankers in Wyoming on Friday," Huang said. "I expect the local equity market to remain in consolidation until then."
Source: Focus Taiwan News Channel