Taipei-Shares in Taiwan staged a mild rebound and closed above the 11,300-point mark Monday as the prospects of a first phase deal on trade between the United States and China being signed in November buoyed investors, dealers said.
Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) extended its gains from a session earlier, leading the broader market higher, after its American depositary receipts rose in the U.S. on Friday.
But several other large-cap tech stocks were in consolidation mode, they said.
The weighted index on the Taiwan Stock Exchange (TWSE), the Taiex, ended up 18.90 points, or 0.17 percent, at 11,315.02, after moving between 11,295.21 and 11,341.03, on turnover of NT$112.62 billion (US$3.69 billion).
The market opened up 0.23 percent as investors reacted positively to a 0.57 percent gain by the Dow Jones Industrial Average and a 0.41 percent rise by the S and P 500 index Friday on optimism over a Washington-Beijing trade deal, dealers said.
Buying in select high tech stocks, in particular TSMC, continued to push the Taiex past technical resistance ahead of 11,300 points to hit the day's high, but some investors shifted to the sell side late in the session, capping the day's gains, they said.
"Market sentiment was boosted by optimism on global trade as investors hope the U.S. and China will sign a trade agreement in November as planned after an initial phase of trade talks wrapped up earlier this month," equity market analyst Andy Hsu said.
On Friday, the Office of the U.S. Trade Representative said the two sides have "made headway on specific issues and...are close to finalizing some sections of the agreement."
On Saturday, China's Commerce Ministry said in a statement that the two countries have agreed to address core issues in an appropriate manner, adding the U.S. will buy cooked poultry from China and Beijing will lift a ban on U.S. poultry.
"TSMC continued to play a critical role in dictating the movement of Taiwan's stock market," Hsu said.
TSMC, the most heavily weighted stock in the local market, rose 0.34 percent to close at NT$294.50, with 20.04 million shares changing hands after its ADRs hit a new high Friday.
The gains posted by TSMC alone contributed to a roughly 10 point increase in the Taiex and boosted the bellwether electronics index by 0.31 percent.
"Investors remained upbeat about TSMC's business outlook, expecting that it will continue to take advantage of its lead in technology over its peers to secure more orders," Hsu said. "But, stiff technical resistance for the stock is expected at around NT$300."
Buying spread to other semiconductor stocks, with integrated circuit designer MediaTek Inc. up 2.11 percent to close at NT$387.00, and dynamic random access memory chip maker Nanya Technology Corp. adding 0.28 percent to end at NT$71.90.
"It's possible that foreign institutional investors were the main buyers of the stock and other gaining tech heavyweights today on the back of ample liquidity," Hsu said.
After the market closed, the TWSE released data showing foreign institutional investors bought a net NT$6.94 billion in shares Monday after a net buy of 3.30 billion a session earlier.
"The market's gains were largely driven by high liquidity," Hsu said. "Hopes of more funds flowing into the equity markets have been reinforced as investors are expecting the U.S. Federal Reserve to cut interest rates again soon."
The Fed has scheduled a two-day policymaking meeting that opens Tuesday.
Some other tech heavyweights faced downward pressure as investors locked in earlier gains, dealers said.
Among them, iPhone assembler Hon Hai Precision Industry Co. fell 0.12 percent to close at NT$80.10, and Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., shed 0.46 percent to end at NT$4,330.00.
Old economy stocks appeared mixed amid fears that the Taiex would face a major pullback after a recent strong showing, dealers said.
Food brand Uni-President Enterprises Corp. gained 1.48 percent to close at NT$75.20, and rival Lian Hwa Foods Corp. rose 1.33 percent to end at NT$41.85, while Asia Cement Corp. fell 0.46 percent to close at NT$43.50, and Formosa Plastics Corp. lost 0.10 percent to end at NT$97.20.
"While foreign institutional investors kept picking up local stocks, Taiwanese institutional investors, in particular life insurance companies, were cutting their holdings," Hsu said. "So the gains today were capped."
"As the Taiex has jumped over high technical hurdles ahead of the 5-day moving average of around 11,288 points, a further uptrend is possible," Hsu said.
Source: Focus Taiwan News Channel