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Stocks close lower in high-volume session of trading

On the last trading session of the year, shares traded in a narrow range amid strong trading volume. The benchmark TAIEX closed 27.19 points, or 0.41 percent, lower at 6,548.34, as investors locked in profits after recent strong gains, dealers said.

For the year, the TAIEX gained 6.66 percent from the closing level of 6,139.69 on Dec. 31 of last year. According to SinoPac Securities Corp's (建華證券) statistics, it appears that High Tech Computer Corp (宏達電), MediaTek Inc (聯發科), Mitac International Corp (神達) and Wistron Inc (緯創) were some of the strongest performers this year.

Shares of High Tech Computer surged 383 percent for the year. The company dropped 2.2 percent to NT$616 (US$18.60) yesterday; MediaTek rose 97 percent year-on-year but fell 1.9 percent to close at NT$387; Mitac advanced 190 percent this year and gained 0.2 percent to NT$48.3; while Wistron moved up 174 percent this year and closed 2.0 percent higher at NT$41.7 yesterday.

In yesterday's session, profit-taking was relatively modest and the market appears to have formed a solid basis going into the new year. But there were some concerns about United Microelectronics Corp (UMC, 聯電) following another spat with the authorities and the subsequent resignation plans of its chairman Robert Tsao (曹興誠).

UMC, the second largest contract chipmaker after Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), lost ground after Tsao said he would step down, but the news did not really impact the broader market, dealers said.

UMC fell 0.94 percent at NT$18.60 while TSMC was down 0.8 percent at NT$62.50.

While local investors have become more active recently in the market, what their foreign peers decide on will be crucial going into next month, said Barits International Securities (倍利國際證券) assistant vice president Alex Huang.

"The increased margin loan outstanding showed that local investors were aggressive in terms of portfolio-building over the past two to three weeks."

The recent upturn in share prices, coupled with the appreciation in the local currency, suggest foreign investors may well stay on the buy side.

"It would be worrisome should foreign investors adopt a cautious stance next month," Huang added.

The New Taiwan dollar also fell last year after crude oil prices reached a record. The currency rose in the previous three years.

"For the whole year, there was higher demand for the US dollar amid rising oil prices, pressuring Taiwan's currency," said Augustine Wang, a currency trader at Chinese Bank (中華銀行) in Taipei.

The local currency fell 2.8 percent to NT$32.85 against the US currency this year, according to Taipei Forex Inc. But the NT dollar rose 0.2 percent yesterday to close at NT$32.850 on speculation funds abroad will buy more of the nation's stocks and currency.
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