Taipei, Shares in Taiwan ended little changed Wednesday as the main board gave up most of its earlier gains amid strong technical resistance at around 11,000 points, dealers said.
Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, continued its role stabilizing the broader market, as other large cap stocks, such as iPhone assembler Hon Hai Precision Industry Co., moved lower, they said.
The weighted index on the Taiwan Stock Exchange or the Taiex closed up 1.96 points, or 0.02 percent, at 11,027.64, after moving between 10,995.83 and 11,070.85, on turnover of NT$120.57 billion (US$3.91 billion).
The market opened up 0.26 percent on follow-through buying from the earlier session, when the Taiex closed up 0.35 percent, with local investors encouraged to buy by gains on Wall Street, where the Dow Jones Industrial Average rose 0.55 percent and the tech heavy Nasdaq index hit a new high, up 1.32 percent overnight, dealers said.
With the Taiex moving to the day's high on the back of TSMC's upturn, some investors shifted to the sell side, cutting their holdings in other tech heavyweights such as Hon Hai, as well as old economy stocks in the petrochemical sector, pushing the main board into negative territory and below 11,000 points at one point, dealers added.
However, bargain hunting in the late trading session emerged, helping the Taiex close above 11,000 by the end of the session, dealers said.
"After the Taiex closed above 11,000 points yesterday, the main board has been faced with high technical hurdles," equity market analyst Andy Hsu said. "Now, the main board was in consolidation mode."
"Thanks to TSMC, the market was able to stay above the 11,000 point mark at a time when foreign institutional investors still hold a large number of long position futures contracts, expecting a higher spot market," Hsu said.
As of Tuesday, foreign institutional investors owned a net of about 62,000 long position futures contracts, a relatively high level that shows optimism over the spot market, according to Hsu.
TSMC rose 0.37 percent to close at NT$269.00 with 26.40 million shares changing hands. The stock hit an early high of NT$270.00, which pushed its market capitalization over NT$7 trillion at one point, with NT$6.97 trillion recorded at the close of trading.
Also in the electronics sector, shares in Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., gained 0.86 percent to end at NT$4,670.00 in the wake of a proposal by the company to issue an NT$68 cash dividend per share for its 2018 earnings.
TSMC's and Largan's gains offset the downturn suffered by other large cap tech stocks such as Hon Hai, which fell 1.59 percent to close at NT$86.90, and integrated circuit packaging and testing services provider ASE Technology Holding Co., which lost 1.62 percent to end at NT$73.10.
The main board also benefited from a stable financial sector, a market laggard, while old economy stocks were mixed throughout the session, Hsu said.
In the financial sector, which closed up 0.3 percent, shares in Mega Financial Holding Co. rose 1.60 percent to close at NT$28.65, and Fubon Financial Holding Co. added 0.11 percent to end at NT$45.40, while Cathay Financial Holding Co. fell 0.11 percent to close at NT$44.30.
Among falling old economy stocks, Formosa Chemicals and Fibre Corp. lost 0.46 percent to close at NT$108.50, and Formosa Petrochemical Corp. dropped 0.43 percent to end at NT$115.00.
In addition to stiff technical resistance ahead, "market sentiment remains cautious about a possible deal between the United States and China to resolve their trade disputes," Hsu said. The market has widely anticipated an agreement will be signed in May, though details remain unclear.
Hsu said the main board is expected to continue to consolidate with some technical support likely at around 10,900 points.
Source: Focus Taiwan News Channel