Taipei, Shares in Taiwan extended their momentum from the previous session early on Tuesday with local investors motivated by a higher Wall Street, on the back of a trade deal reached by the United States and Mexico, to buy into local equities, dealers said.
Rotational buying dominated the main board with interest focusing on large cap electronics stocks, in particular contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, they said.
However, the main board failed to sustain its earlier strength and ended the session below the 11,000 point mark as trade friction between the U.S. and China continued to weigh on the market, they added.
The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex closed up 87.34 points, or 0.80 percent, at 10,989.55, after moving between 10,946.33 and 11,005.55, on turnover of NT$127.67 billion (US$4.15 billion).
The market opened up 0.40 percent in response to gains posted by Wall Street, where the S&P 500 index and the tech-heavy Nasdaq index hit new highs overnight after the U.S. and Mexico cut a deal to leave behind the 24-year old North American Free Trade Agreement, a step which was said to remove some of the uncertainty in the market, dealers said.
Momentum on the local main board accelerated as the electronics sector took the lead, pushing the Taiex above the 11,000 point mark at one point before falling back slightly by the end of the session, they said.
"The tech sector has generally moved in consolidation mode in recent sessions to become attractive to investors," Mega International Investment Services Corp. analyst Alex Huang said. "So, the upturn in the U.S. market just served as a catalyst for bargain hunters to jump onto the bandwagon today."
"In addition, the U.S. dollar moved lower against the major regional currencies, which reduced worries over fund exodus from the region, prompting investors to expect further liquidity-driven gains," Huang said.
According to the TWSE, foreign institutional investors bought a net NT$8.11 billion worth of shares on the main board Tuesday after net buying of NT$9.27 billion on Monday.
The electronics sector, which rose 1.21 percent, accounted for about 73 percent of total turnover on Tuesday, Huang said.
"Thanks to TSMC, the high tech sector dominated the trading today, and buying also spread to other electronics heavyweights as the sector entered the traditional peak season of the year," Huang said.
TSMC gained 1.84 percent to close at NT$249.50 with 36.75 million shares changing hands on reports that rival GlobalFoundries has shelved a plan to develop the advanced 7 nanometer processor, which is expected to reinforce the market lead enjoyed by the Taiwanese firm.
Among other rising tech stocks, shares in Largan Precision Co., a smartphone camera lens supplier to Apple Inc., gained 3.25 percent to end at NT$4,765.00, contract notebook computer maker Quanta Computer Inc. rose 2.51 percent to close at NT$53.00, and integrated circuit designer MediaTek Inc. added 1.82 percent to end at NT$252.00.
Non-tech stocks were mixed as market attention largely pointed to the electronics sector, Huang said.
Shares in food brand Uni-President Enterprises Corp. rose 1.16 percent to close at NT$78.80, and Formosa Plastics Corp. added 0.44 percent to end at NT$114.00, while Formosa Chemicals & Fibre Corp. lost 0.40 percent to close at NT$123.00 and Cathay Financial Holding Co. fell 0.19 percent to end at NT$52.70.
"Technical resistance ahead of 11,000 points remains stiff and it is unlikely the main board will jump over that hurdle unless daily turnover expands to NT$140 billion or higher," Huang said.
"Many investors prefer to stay on the sidelines for the moment as the trade issues between the U.S. and China show no sign of being resolved anytime soon. That could have real impact on the global economy," he said.
Source: Focus Taiwan News Channel