Local shares stagnant amid fears over selling by foreign institutional investors
Shares in Taiwan closed little changed Wednesday as investors feared more foreign selling after foreign institutional investors shifted to the sell side on Tuesday, dealers said.
The bellwether electronics sector fell into the doldrums, while select “Apple concept stocks” attracted buying on hopes that the launch of the next-generation iPhone will boost their shipments in the second half of this year.
Among the Apple suppliers in Taiwan that rallied Wednesday was smartphone camera lens maker Largan Precision Co. (
). It extended its gains from Tuesday to hit a new closing high amid optimism over its earnings outlook, dealers said.
Buying rotated to old economy stocks, especially in the petrochemical and cement sector, because of their relatively low valuations, pushing the market’s benchmark index slightly higher at the close, they said.
The weighted index on the Taiwan Stock Exchange ended up 6.17 points, or 0.06 percent, at 9,397.31, after moving between 9,364.38 and 9,409.44, on turnover of NT$77.74 billion (US$2.52 billion).
The market opened up 2.45 points and rose to the day’s high in the wake of gains seen on Wall Street overnight amid reduced concerns over Greece’s debt problems, dealers said.
But after the index breached the 9,400-point level, some investors began selling their holdings to lock in profits, sending prices lower, they said.
Foreign Investors Cut Holdings
“Investors simply used foreign institutional selling on Tuesday as an excuse to be cautious. Many of them have been afraid that foreign investors will continue to cut their holdings,” Mega International Investment Services Corp. analyst Alex Huang said.
Although the weighted index closed up 0.52 percent on Tuesday, foreign institutional investors sold a net NT$1.30 billion in local shares on the main board. They were net buyers of NT$289 million in shares on the exchange Wednesday.
“The Wednesday session appeared quiet on thin trading volume. The local equity market failed to climb out of consolidation mode because of the lack of fresh leads,” Huang said.
The electronics sector
closed down 0.06 percent, while Largan, the most expensive stock in the local market, rose 0.70 percent to close at NT$3,580.00, off an early high of NT$3,620.00.
Among the other Apple suppliers in Taiwan, metal casing maker Catcher Technology Co. ( ) rose 0.40 percent to end at NT$378.50, and iPhone assembler Pegatron Corp. ( ) gained 0.23 percent to close at NT$88.70.
Old Economy Sector
In the old economy sector, Formosa Plastics Corp. ( ) added 1.66 percent to close at NT$73.30, and Nan Ya Plastics Crop.( ) rose 1.69 percent to end at NT$72.40, while Asia Cement Corp. ( ) closed up 1.24 percent at NT$36.80.
“These traditional industrial stocks had suffered heavy losses in recent sessions. So I think their gains were technical in nature as investors wanted places in which to park their funds for the moment,” the analyst said.
Huang said the market’s benchmark index is expected to continue to range between 9,300 points and 9,500 points in the near term, but selling could emerge after the index moves above 9,400 points.