Taiwan shares close up as electronics sector rebounds

Taipei-Shares in Taiwan moved higher to close above 11,500 points Friday as the bellwether electronics sector bounced back, serving as a driver to the upturn, dealers said that day.

Buying was sparked by renewed hopes that the United States and China will sign a trade deal soon after the two sides expressed optimism toward an agreement over the past two days, the dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE), or Taiex, ended up 75.18 points, or 0.66 percent, at 11,525.60, after moving between 11,485.46 and 11,552.25, on turnover of NT$130.20 billion (US$4.28 billion).

The market opened up 0.31 percent on a technical rebound from a session earlier, when the Taiex ended down 0.15 percent, and buying continued to push up the broader market past the technical hurdles ahead of 11,500 points as large-cap tech stocks climbed out of the doldrums of a session earlier, the dealers said.

The strength continued and maintained the Taiex above the 11,500- point level for the rest of the trading session, they added.

"Investors here seemed to be encouraged by the latest developments in the trade issue between the U.S. and China," Hua Nan Securities analyst Kevin Su said, referring to remarks made by top government officials from the two economies.

Overnight, White House economic adviser Larry Kudlow was cited by Reuters as saying that Washington is "getting close" to a trade deal with Beijing. On Thursday, China's Ministry of Commerce spokesman Gao Feng said the two countries were holding deep discussions about a phase one deal, adding that a roll-back of some tariffs is key to reaching an agreement.

"Therefore, bargain hunters got active today to take advantage of the losses seen in the previous two sessions by seizing on the latest developments in the trade talks," Su said.

"Buying in tech heavyweights helped the bellwether electronics sector to be the mainstream gainer again today," Su said. "I think foreign institutional investors stood on the buy site, which propped up local equities today."

According to the TWSE, foreign institutional investors bought a net NT$4.26 billion-worth of shares on the main board Friday after a net buy of NT$4.24 billion a day earlier. For this week, foreign institutional investors' net buy hit NT$6.51 billion.

Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) remained one of the top choices of foreign institutional investors on the back of its sound fundamentals, Su said.

TSMC, the most heavily weighted stock in the local market, rose 1.15 percent to close at NT$307.00 with 28.81 million shares changing hands. The gains contributed an increase of about 35 points to the Taiex and pushed up the electronics sector and the semiconductor sub-indexes by 0.86 percent and 1.13 percent, respectively.

Su said the buying in TSMC stocks also spread to integrated circuit designer MediaTek Inc., shares of which rose 2.80 percent to close at NT$422.00. "The gains posted by TSMC and MediaTek showed market optimism toward their efforts in 5G technology development," Su said.

Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. gained 0.90 percent to close at NT$90.10, Largan Precision Co., a supplier of smartphone lenses to Apple Inc., added 0.67 percent to end at NT$4,500.00, and PC brand Asustek Computer Inc. rose 0.44 percent to close at NT$227.50.

Su said rotational buying benefited select old economy stocks, in particular the cement sector, in which Taiwan Cement Corp. rose 1.34 percent to close at NT$41.70 and Asia Cement Corp. gained 3.35 percent to end at NT$44.75.

Meanwhile, Nan Ya Plastics Corp. rose 0.70 percent to close at NT$71.50 and food brand Uni-President Enterprises Corp. gained 0.55 percent to end at NT$73.00, while textile maker Far Eastern New Century Corp. closed unchanged at NT$29.75.

In the financial sector, which closed up 0.41 percent in line with the broader market, Cathay Financial Holding Co. rose 0.95 percent to end at NT$42.55 and E. Sun Financial Holding Co. gained 0.74 percent to close at NT$27.25.

"Despite today's rebound, the local main board could see volatility, since uncertainty over global trade will remain until an agreement is signed in black and white," Su said.

"However, I expect that the Taiex will see strong technical support at around 14,000 points, the 20-day moving average," Su said.

Source: Focus Taiwan News Channel