Taipei, Taiwan shares extended their momentum from a session earlier Tuesday morning after gains in U.S. markets, but selling soon set in to limit the gains.
As of 10:39 a.m., the weighted index (the Taiex) on the Taiwan Stock Exchange had risen 24.86 points, or 0.23 percent, at 10,991.06, off an early high of 11,034.12, on turnover of NT$70.01 billion (US$2.33 billion).
The Taiex hit the early high at around 9:30 a.m. following a 1.21 percent rise in the Dow Jones Industrial Average to above the 25,000-point mark overnight, the result of Washington and Beijing backing off their trade war rhetoric and agreeing to pursue a trade agreement.
But investors were reluctant to chase prices because of a cautious attitude toward upcoming negotiations between the United States and China and concerns over a possible pullback after the Taiex reached 11,000 points, dealers said.
"After the latest Wall Street rally, it remains to be seen whether such a strong showing will continue as there is still no final deal with exact terms on how to resolve the trade dispute," Hua Nan Securities analyst Henry Miao said.
"Investors here are still worried that if Wall Street turns volatile amid the ups and downs of trade talks between the U.S. and China, other global financial markets including Taipei will suffer," Miao said.
In addition, some Asian markets, including the Taiwan Stock Exchange, had steamed ahead Monday before the Wall Street rally overnight, Miao said.
"So it was no surprise that investors here locked in their gains today after the Taiex went above 11,000 points," he said.
Miao said there has been stiff technical resistance ahead of 11,000 points, and the market may consolidate for some time to digest downward pressure before moving above that level.
While many large cap high-tech stocks took a pause, buying focused on passive electronics component suppliers on Tuesday on the back of rising product prices, Miao said.
Among them, Walsin Technology Corp. had risen 8.40 percent to NT$335.50, and Holy Stone Enterprise Co. had added 4.45 percent to NT$246.50.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co., was down 0.82 percent to NT$84.30, off an early high of NT$85.30, while Taiwan Semiconductor Manufacturing Co., the most heavily weighted stock in the local market, had added 0.66 percent to NT$230.50, off an early high of NT$233.50.
"Many investors remained wary of foreign institutional investors' strategy since few can be sure when foreign investors will resume their aggressive buying," Miao said.
Although the Taiex gained 1.25 percent on Monday, foreign institutional investors registered a moderate net buy of NT$3.09 billion in shares on the market.
Source: Focus Taiwan News Channel