Taiwan shares end up but caution remains as Fed meets

Shares in Taiwan closed higher Wednesday but the gains were limited by investor caution before the conclusion of the U.S. Federal Reserve's policymaking meeting later in the day, dealers said.

Large tech stocks continued to move in a narrow range while select old economy stocks attracted rotational buying, giving some support to the broader market, they said.

The Taiex, the Taiwan Stock Exchange's benchmark index, ended up 56.19 points, or 0.33 percent, at 17,122.16, after moving between 17,080.51 and 17,153.76. Turnover totaled NT$326.099 billion (US$11.69 billion).

The market opened up 0.13 percent and hit the day's high early in the session in reaction to rallies on markets in the United States, where the Dow Jones Industrial Average ended above the 36,000-point mark for the first time overnight, dealers said.

As the Taiex moved closer to the nearest level of technical resistance ahead of 17,200 points, investors appeared reluctant to chase prices, limiting the day's gains, they said.

"The Fed's meeting was the most important factor in how regional markets, including Taipei, performed today," Mega International Investment Services Corp. analyst Alex Huang said.

"Although the market is widely anticipating that the Fed will announce it will scale back its asset purchases, investors still wanted to know how quickly that will happen and when the purchases will end, hoping for clues on when the Fed will raise interest rates," Huang said.

Investor caution led to little movement in tech heavyweights, Huang said, citing contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the market's most heavily weight stock, which closed unchanged at NT$592.00.

"Without a breakthrough by TSMC, it was no surprise that the Taiex remained in consolidation mode," Huang said. "It had nothing to do with TSMC's fundamentals. Investors simply worried that the prospect of higher interest rates would make large tech stocks less attractive."

Also in the semiconductor industry, United Microelectronics Corp., a smaller contract chipmaker, rose 0.34 percent to close at NT$59.20, and integrated circuit designer MediaTek Inc. gained 0.43 percent to end at NT$932.00.

IC packaging and testing services provider ASE Technology Holding Co. fell 0.51 percent to close at NT$98.30.

Another electronics heavyweight, iPhone assembler Hon Hai Precision Industry Co., ended unchanged at NT$107.50.

"The bright side was that rotational buying remained active. Today, some electronic component makers got a boost due to their relatively low valuations," Huang said.

Among them, capacitor and resistor supplier Walsin Technology Corp. soared 10 percent, the maximum daily increase, to close at NT$158.00, and Yageo Corp., the world's third largest multilayer ceramic capacitor (MLCC) maker, rose 3.05 percent to end at NT$19.95.

In the flat panel industry, which had been hit hard by falling product prices, AU Optronics Corp. gained 5.00 percent to close at NT$19.95, and Innolux Corp. added 1.81 percent to end at NT$16.80.

As for the old economy sector, the transportation industry continued its technical rebound, gaining 5.13 percent.

Within the sector, Evergreen Marine Corp., the largest cargo shipper in Taiwan, closed 6.67 percent higher at NT$112.00, and rivals Wan Hai Lines Ltd. and Yang Ming Marine Transport Corp. rose 6.52 percent and 6.90 percent, respectively, to end at NT$171.50 and NT$108.50.

"Many investors still bet on shipping companies reporting good earnings for the third quarter due to an increase in freight rates," Huang said. "But I wouldn't suggest continuing to buy into these stocks as their growth momentum has weakened."

Elsewhere, textile brand Far Eastern New Century Corp. rose 0.34 percent to close at NT$29.55, and Eclat Textile Co. fell 2.14 percent to end at NT$594.00.

In the financial sector, which rose 0.18 percent, Cathay Financial Holding Co. gained 0.35 percent to close at NT$57.60, and Fubon Financial Holding Co. added 0.14 percent to end at NT$72.70.

"We have to watch closely how the U.S. markets will move after the end of the Fed meeting. Taiwan's market tomorrow will be determined by these external factors," Huang said.

According to the TWSE, foreign institutional investors bought a net NT$3.89 billion in shares Wednesday.

Source: Focus Taiwan News Channel