Taipei-Shares in Taiwan closed little changed Monday after an early rally was blunted by strong technical resistance at around 11,600 points, dealers said.
The willingness to chase prices was also hurt by lingering worries over the ongoing trade dispute between the United States and China that will likely remain until the two sides formally sign a phase-one agreement, they said.
The weighted index on the Taiwan Stock Exchange (TWSE), the Taiex, ended down 5.22 points, or 0.05 percent, at 11,561.58, after moving between 11,559.33 and 11,604.75. Turnover was NT$112.30 billion (US$3.68 billion).
The market opened up 0.21 percent as buying was triggered by a 0.39 percent gain in the Dow Jones Industrial Average and a 0.22 percent gain in the S and P 500 index in the United States on Friday.
Those gains in the U.S. came after U.S. President Donald Trump said Washington and Beijing were "very close" to reaching a trade agreement, dealers said.
But with the Taiex breaching the 11,600-point mark just after 10 a.m., selling set in, especially in select large cap electronics stocks such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and iPhone assembler Hon Hai Precision Industry Co.
That dragged the index into negative territory, and trading remained in a narrow range to the end of the session, dealers said.
In addition to Trump's comments on the trade agreement, Chinese President Xi Jinping t(???) old a visiting U.S. business delegation on Friday that China wanted to make a deal with the U.S. but was not afraid to "fight back."
"So although both sides look forward to a deal, uncertainty over the global economy will remain in place before an agreement is signed," Concord Securities analyst Kerry Huang said.
"I am not surprised that many investors here were reluctant to chase prices for the time being despite the early gains."
TSMC, the most heavily weighted stock in Taiwan, fell 0.65 percent to close at the day's low of NT$307.00, off a high of NT$310.50.
Hon Hai, second after TSMC in terms of market value, shed 1.97 percent to end at NT$89.60, off a high of NT$91.60.
"TSMC and Hon Hai had been the favorites among foreign institutional investors and drove the Taiex's gains in recent sessions," Huang said.
"The selling in the two stocks today could signal that foreign institutional investors are taking a break after recent buying."
Data on foreign institutional investor trading of the two stocks was not immediately available, but overall, they were net buyers of NT$1.46 billion in shares on the market Monday.
Bucking the downturn, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., played catch-up after lagging behind the Taiex in recent sessions, gaining 2.65 percent to close at NT$4,460.00.
Integrated circuit designer MediaTek Inc. added 1.82 percent to end at NT$418.50 on reports it is raising the prices of its 5G chips due to tight supply.
Select non-tech stocks were bolstered by rotational buying throughout the session, Huang said.
Among the gaining old economy stocks, food brand Uni-President Enterprises Corp. rose 0.82 percent to close at NT$74.00, Formosa Chemical and Fibre Corp. added 0.46 percent to end at NT$87.80, and Nan Ya Plastics Corp. grew 0.28 percent to close at NT$71.70.
In the financial sector, which ended up 0.29 percent, Fubon Financial Holding Co. rose 1.77 percent to close at NT$46.10 after the company said at an investor conference Friday that its net profit for the first nine months of 2019 was up 7 percent from a year earlier.
"Before a U.S-China trade deal is signed, I expect the Taiex will continue to remain in consolidation," Huang said.
"If there is any technical correction, the Taiex is expected to see strong technical support at around 11,500 points in the near term."
Source: Focus Taiwan News Channel