Late buy­ing lifts lo­cal shares but growth cau­tion re­mains

The China Post - - TAIWAN BUSINESS -

Shares in Tai­wan got a boost from bar­gain hunt­ing in the late trad­ing ses­sion Fri­day, re­vers­ing ear­lier losses, while mar­ket sen­ti­ment re­mained wary of low­erthan- ex­pected gross do­mes­tic prod­uct ( GDP) growth for the sec­ond quar­ter, deal­ers said.

The last-ditch buy­ing fo­cused on large-cap stocks in both the elec­tron­ics and non- high- tech sec­tors, such as Tai­wan Semi­con­duc­tor Man­u­fac­tur­ing Co. (TSMC, ), Formosa Plas­tics Corp. ( ), and Fubon Fi­nan­cial Hold­ing Co. ( ), the deal­ers said.

The weighted in­dex on the Tai­wan Stock Ex­change closed up 13.85 points, or 0.16 per­cent, at 8,665.34, af­ter mov­ing be­tween 8,591.37 and 8,676.27 on turnover of NT$85.90 bil­lion ( US$ 2.73 bil­lion).

The mar­ket opened up 0.22 per­cent and rose to the day’s high on fol­low-through buy­ing from a ses­sion ear­lier, but with the in­dex mov­ing closer to 8,700 points, selling set in to push down share prices, the deal­ers said.

Min­utes be­fore the mar­ket closed, how­ever, bar­gain hun­ters be­came ac­tive to pick up TSMC and other mar­ket heavy­weights to vault the in­dex back into pos­i­tive ter­ri­tory and boost turnover to top NT$ 80 bil­lion, they said.

“Since late April, the weighted in­dex has fallen more than 1,000 points. That’s why bar­gain hunt­ing emerged to take ad­van­tage of low val­u­a­tions, in par­tic­u­lar of large- cap stocks,” KGI Se­cu­ri­ties an­a­lyst Phil Chu said.

“For­eign in­sti­tu­tional in­vestors cut their short po­si­tion con­tracts sig­nif­i­cantly in the fu­tures mar­ket yesterday, another pos­i­tive sign paving the way for a sta­ble lo­cal eq­uity mar­ket in the near term,” Chu said, adding that for­eign in­sti­tu­tional in­vestors owned an ap­prox­i­mate net 6,000 short po­si­tion con­tracts Thurs­day, down some 5,000 from a day ear­lier.

Ben­e­fit­ting from the late trad­ing ses­sion, TSMC, the most heav­ily weighted stock in the lo­cal mar­ket, rose 0.72 per­cent to close at the day’s high of NT$140.50, off an early low of NT$137.50, with 40.05 mil­lion shares chang­ing hands.

Formosa Plas­tics gained 0.57 per­cent to close at the day’s high of NT$ 70.00 af­ter re­cov­er­ing from an early low of 68.50, while Fubon Fi­nan­cial added 0.52 per­cent to end at the day’s high of 57.60, off an early low of 56.50.

“Although turnover was lifted by the late- ses­sion buy­ing to some ex­tent, the amount re­mained thin, as many in­vestors stepped away from the trad­ing floor as their sen­ti­ments were hurt by the sec­ond-quar­ter GDP growth,” Chu said. “Weak­en­ing global de­mand has hurt Tai­wan’s elec­tron­ics ex­ports.”

The latest GDP data shows that Tai­wan’s econ­omy rose only 0.64 per­cent from a year ear­lier in the sec­ond quar­ter, lag­ging be­hind an ear­lier forecast of a 3.05 per­cent in­crease, af­ter the coun­try’s ex­ports con­tracted 1.30 per­cent.

“Amid cau­tious sen­ti­ment, it is pos­si­ble that the lo­cal eq­uity mar­ket will con­tinue in con­sol­i­da­tion mode over the next few ses­sions. And only if the in­dex breaches 8,733 points — the near­est tech­ni­cal re­sis­tance level — the mar­ket will be­come tech­ni­cally health­ier,” Chu said.

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