Taipei--Shares in Taiwan closed slightly higher Monday after recouping earlier losses as turnover fell, with many investors staying on the sidelines, watching closely how foreign institutional investors act after returning from their summer vacation, dealers said.
With trading volume at lows, many large-cap stocks in the bellwether electronics sector remained in the doldrums, while buying rotated to the old economy sector, in particular raw material stocks, to lend support to the broader market, they said.
The weighted index on the Taiwan Stock Exchange closed up 5.06 points, or 0.05 percent, at 10,326.39, after moving between 10,282.72 and 10,336.37, on turnover of NT$83.94 billion (US$2.83 billion).
The market opened down 5.24 points and fell to the day's low as investors took their cue from a falling Wall Street, where the Dow Jones Industrial Average closed down 0.35 percent and the S and P 500 index ended 0.18 percent lower on Friday.
With the local weighted index falling below the 10,300 point mark, bargain hunters emerged, helping the broader market get out of the earlier downturn by picking up select old economy stocks, dealers said. The weighted index's gains, despite being limited, continued to the end of the session, dealers added.
"Market sentiment in the local equity market appeared cautious throughout the session amid fears of further volatility on Wall Street," Ta Ching Securities analyst Andy Hsu said. "A volatile Wall Street, valuation of which has been high, could affect foreign institutional investors' mood so many local investors preferred to stay on the sidelines for now before foreign investors return from their summer vacation."
"Technically speaking, the local main board moved in consolidation mode with the weighted index fluctuating in a narrow range in thin trade," Hsu said.
Due to the thin turnover, many electronics heavyweights moved slowly so it was hard for the weighted index to make a breakthrough, Hsu said. The electronics sector closed down 0.05 percent, underperforming the broader market.
Among large-cap high-tech stocks, contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???), the most heavily weighted stock on the local market, fell 0.47 percent to close at NT$211.50 with 11.86 million shares changing hands.
Also in the electronics sector, iPhone and iPad assembler Hon Hai Precision Industry Co. (??), second to TSMC in terms of market capitalization, lost 0.43 percent to end at NT$115.00, while shares in Largan Precision Co. (???), a smartphone camera lens supplier to Apple Inc., rose 0.63 percent to close at NT$5,565.00.
Buying largely rotated to the old economy sector on the back of a recovery in product prices on the world market, Hsu said.
Among the gaining old economy stocks, shares in Nan Ya Plastics Corp. (??) rose 0.93 percent to close at NT$75.60 and Formosa Chemicals and Fibre Corp. (??) added 0.22 percent to end at NT$92.00.
Chung Hung Steel Corp. (??) rose 3.24 percent to close at NT$11.15, and Makalot Industrial Co. (??), one of the largest apparel makers in Taiwan, gained 2.90 percent to end at NT$142.00.
"The slow movement of the local equity market showed that it will not be easy for the main board to jump over the nearest technical resistance ahead of 10,400 points any time soon unless turnover expands," Hsu said.
"Moreover, investors had better keep a close eye on the upcoming annual central banker meeting, waiting for Janet Yellen, chair of the U.S. Federal Reserve to speak, as her comments could move global markets," Hsu said.
The central banker meeting is scheduled for Aug. 25 in Jackson Hole, Wyoming.
Source: Focus Taiwan News Channel