Shares in Taiwan ended higher Tuesday, the first trading session of 2017, but the gains were capped by anemic turnover as foreign institutional investors had still not returned from the New Year holiday, dealers said.
The bellwether electronics sector gained ground, led by large-cap stocks such as contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???), because of high expectations for the Consumer Electronics Show (CES) scheduled to open in Las Vegas on Jan. 5, they said.
It was the first time in three years that the exchange posted gains on the first trading day of a year after a 2.68 percent decline on the first trading day in 2016 and a 0.35 percent drop on the first trading day of 2015.
The weighted index on the Taiwan Stock Exchange closed up 19.38 points, or 0.21 percent, at 9,272.88, after moving between 9,235.95 and 9,273.65, on turnover of NT$45.29 billion (US$1.41 billion).
The market opened down 0.94 points and moved to the day's low as investors reacted to losses in the United States on Friday, when the Dow Jones Industrial Average fell 0.29 percent and the tech-heavy Nasdaq index shed 0.90 percent, dealers said.
With the index moving closer to the nearest technical support of around 9,200 points, bargain hunters turned active, picking up electronics heavyweights such as TSMC, to push the broader market back into positive territory by the end of the session, they said.
The weighted index extended gains from a 1.10 percent rise on Friday, the last trading day in 2016.
"Friday's strong showing largely reflected the government's proposal to cut the transaction tax on day trading," Mega International Investment Services Corp. analyst Alex Huang said.
"Judging from today's market movement, the effects of the tax cut announcement faded to some extent."
The Cabinet has proposed a cut in the transaction tax on day trading to 0.15 percent from the current 0.3 percent, pending the approval of the Legislative Yuan.
"Now, whether the local equity market will continue its upturn (of 10.98 percent) seen in 2016 will depend on whether foreign institutional investors will continue their aggressive buying as they did last year," Huang said.
"Today's low turnover showed that many of them have not returned from the holiday."
According to the TWSE, foreign institutional investors sold a net NT$263 million in shares on the main board Tuesday.
Huang said the electronics sector served as an anchor that stabilized the broader market with the CES approaching.
"Many investors are hoping that international brands will launch new gadgets at the trade show to stimulate buying, which could help local high-tech firms," he said.
The electronics sector closed up 0.45 percent and the semiconductor sub-index ended up 0.62 percent after TSMC, the most heavily weighted stock in the local market, gained 0.83 percent to close at NT$183.00.
Also helped by expectations of a strong CES were PC brand Asustek Computer Inc. (??), which added 0.75 percent to close at NT$267.00, and contract electronics maker Pegatron Corp. (??), which rose 1.82 percent to end at NT$78.40.
In the financial sector, Fubon Financial Holding Co. (???) finished up 0.78 percent to close at NT$51.40, off an early low of NT$50.70. The gains posted by Fubon Financial helped the financial sector close higher.
"It won't be easy for the market to hover above 9,300 points any time soon because market sentiment remains cautious ahead of the next earnings season at home and on Wall Street (to kick off next week)," Huang said.
Source: Focus Taiwan News Channel