Taipei, Shares in Taiwan closed slightly higher Wednesday after hitting the day's high early in the session before retreating as investors sold some of their holdings in select large cap stocks, dealers said.
The gains were capped below the 20-day moving average of around 10,723 points as market sentiment remained cautious because of fears of a continued fund exodus and concerns over geopolitical tensions, dealers said.
Still, the main board closed above the 10,700-point mark for the first time since April 20, when the benchmark index ended at 10,779.38.
The weighted index on the Taiwan Stock Exchange, the Taiex, closed up 11.97 points, or 0.11 percent, at 10,703.35, after moving between 10,689.81 and 10,748.60, on turnover of NT$133.26 billion (US$4.45 billion).
The market opened up 1.51 points and rose to the day's high early in the session on follow-through buying from a session earlier focused on select market heavyweights, such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), dealers said.
But with the Taiex breaching 10,700 points and moving closer to the nearest technical resistance at around the 20-day moving average, some selling emerged to limit the upturn by the end of the session, they said.
"Look at the falling Taiwan dollar. Many investors simply turned wary of fund outflows, fearing more liquidity flight would have a negative impact on local stock prices," Concord Securities analyst Kerry Huang said.
The U.S. dollar rose sharply against the Taiwan dollar Wednesday, moving close to the NT$30 mark.
"The market ended higher yesterday but foreign institutional investors were still net sellers, which raised concerns that a stronger U.S. dollar will prompt more foreign institutional selling and the remittance of funds out of the country," Huang said.
"Today's moderate turnover showed that many investors hesitated to raise their holdings even though the Taiex moved higher early in the session," Huang said.
According to the TWSE, foreign institutional investors bought a net NT$636.50 million in shares on the market Wednesday after a net sell of NT$346.78 million on Tuesday, when the Taiex closed up 0.82 percent.
After hitting highs, select large cap stocks posted only mild gains or even fell below their previous closing levels at the end of the session, compromising the performance of the broader market, Huang said.
Among them, TSMC, the most heavily weighted stock in the local market, rose 0.66 percent to close at NT$229.50, off an early high of NT$232.00, with 33.76 million shares changing hands.
iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, fell 0.97 percent to end at NT$81.80 after hitting a high of NT$83.10.
Largan Precision Co., which supplies smartphone camera lenses to Apple, gained 0.25 percent to close at NT$4,000.00 after hitting NT$4,165.00.
In the old economy sector, Formosa Plastics Corp. closed unchanged at NT$105.50, off an early high of NT$106.50, while Formosa Petrochemical Corp. lost 0.90 percent to end at NT$110.00, off an early high of NT$112.00.
In addition to a possible fund flight, "investors should pay close attention to the move by the United States to withdraw from the nuclear agreement with Iran," Huang said.
"The withdrawal could lead Washington to re-impose sanctions on Tehran and boost crude oil prices, which could send ripples through global financial markets."
Source: Focus Taiwan News Channel