Taipei--Shares in Taiwan staged a technical rebound after the Dow Jones Industrial Average hit a new high for the seventh straight session overnight, but the gains were limited as contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???) remained in the doldrums, dealers said.
Buying rotated to other high-tech stocks, such as firms in the PC sector, and select old-economy and financial stocks to offset the selling in TSMC, helping the broader market close in positive territory, they said.
Market sentiment was cautious as many investors were waiting for the release of July sales data in the coming days to gauge how strong global demand will end up being in the third quarter, the traditional peak season for the electronics sector, dealers said.
The weighted index on the Taiwan Stock Exchange was up 36.68 points, or 0.35 percent, at 10,506.56, after moving between 10,466.25 and 10,510.70, on turnover of NT$112.14 billion (US$3.71 billion).
The market opened down 1.08 points and moved to the day's low on follow-through selling from a session earlier.
But it soon regained momentum as bargain hunters, emboldened by the Dow's latest high, turned active to pick up select large cap stocks and push the broader market higher until the end of the session, dealers said.
The market closed down 0.47 percent on Thursday due to volatility in the futures market.
"The local market remained in consolidation mode so even though the weighted index bounced back today, the upturn was limited," KGI Securities analyst Phil Chu said. "Many investors have been waiting for the release of July sales data over the next week."
Chu said TSMC underperformed the broader market today with many investors waiting for its July sales numbers, expected sometime next week.
"TSMC's slide reflected caution in the market, and without a breakthrough by TSMC, it was hard for the broader market to make a strong showing," Chu said.
TSMC, the most heavily weighted stock in the local market, fell 0.23 percent to close at NT$213.00, with 21.83 million shares changing hands.
"Fortunately, there is still a lot of liquidity in the market, and buying rotated to other large cap stocks to lead the broader market out of negative territory early in the session," Chu aid.
Among the gaining high-tech stocks, Quanta Computer Inc. (??), the world's largest contract notebook computer marker, gained 1.20 percent to close at NT$75.90, and rival Compal Electronics Inc. (??) rose 0.74 percent to end at NT$20.40.
In the non-high-tech sector, which was also boosted by rotational buying, Formosa Plastics Corp. (??) added 0.54 percent to close at NT$92.40, and Formosa Chemicals & Fibre Corp. (??) rose 0.55 percent to end at NT$92.20.
Among the gaining financial stocks, Mega Financial Holding Co. (???) gained 1.18 percent to close at NT$15.80, and E. Sun Financial Holding Co. (???) rose 1.03 percent to end at NT$19.60.
"Despite repeated record highs posted by the Dow, many tech stocks in the U.S. market have come under pressure due to their relatively high valuations in recent sessions. It was no surprise that the market in Taiwan failed to make a big move today," Chu said.
"Moreover, investors should pay close attention to the July non-farm payroll data due out later in the day in Washington, which could move Wall Street and other markets," Chu said.
Source: Focus Taiwan News Channel