Taipei--Shares in Taiwan extended gains from a session earlier on a technical rebound to close above the 9,700-point mark Tuesday as buying rotated to large-cap stocks across the board, dealers said.
However, turnover remained thin, as fears over a possible immediate interest rate hike by the U.S. Federal Reserve kept weighing on market sentiment, while investors preferred to stay on the sidelines, wary of geopolitical conditions after North Korea's launch of missile tests a day earlier, the dealers said.
The weighted index on the Taiwan Stock Exchange closed up 55.44 points, or 0.57 percent, at the day's high of 9,738.07, off an early low of 9,690.20, on turnover of NT$69.74 billion (US$2.26 billion).
The market opened up 7.63 points on follow-through buying as investors shrugged off losses incurred on Wall Street overnight, and momentum on the main board continued with market heavyweights in the electronics, petrochemical and paper sectors in focus, which pushed up the weighted index past 9,700 points, the dealers said.
In the latter part of the session, investors rushed to pick up large-cap stocks, in particular Taiwan Semiconductor Manufacturing Co. (TSMC, ???), the most heavily weighted stock in the local market, to lift the weighted index to the day's high at the close, they said.
"The local main board had consolidated for almost two weeks, making it a laggard. So, despite the downturn on Wall Street overnight, bargain hunters remained willing to pick up local shares throughout the session today," Mega International Investment Services Corp. analyst Alex Huang said.
"In particular, the late-session buying sustained the early gains, as TSMC, which had been in the doldrums in recent sessions, regained attention from investors to give the broader market a lift," Huang said.
TSMC, the world's largest contract chip maker, rose 1.09 percent to close at the day's high of NT$185.50, jumping over the stiff technical resistance level of around NT$184.00.
Also on the back of buying in the late session, United Microelectronics Corp. (??), the second-largest contract chip maker in Taiwan, gained 2.89 percent to close at NT$12.45, and flat panel supplier Innolux Corp. (??) added 1.63 percent to end at NT$12.45.
In the old economy sector, Chung Hua Pulp Corp. (??) added 7.26 percent to close at NT$12.55, Nan Ya Plastics Corp. (??) rose 1.83 percent to end at NT$72.40, and Formosa Chemicals & Fiber Corp. (??) gained 1.69 percent to close at NT$96.50.
"Despite the gains in the index, turnover remained low, as concerns over a Fed interest rate hike cycle continued to haunt the main board," Huang said. "Many investors are afraid that higher interest rates in the U.S. market will boost the greenback, which will prompt foreign investors to move funds out of the region."
The Fed has scheduled a policymaking meeting for March 14-15, and the chances of the U.S. central bank raising interest rates has risen to more than 80 percent.
"Moreover, North Korea's missile tests have raised geopolitical anxiety. Such non-economic factors have turned away many investors from the trading floor, dragging down trading volume," he said.
"Without turnover expansion, it is hard for the main board to overcome the nearest technical hurdles ahead of 9,800 points any time soon," he added.
Source: Focus Taiwan News Channel