Share prices closed slightly higher in Taipei yesterday as investors remained cautious amid fears that negative leads could emerge from global financial markets while the local bourse is closed for the Lunar New Year holiday, dealers said.
The financial sector encountered heavier downward pressure as market confidence was hit by disappointing fourth-quarter results released by Citigroup, which raised concerns about the impact from the debt problems in the eurozone, they added.
The TAIEX rose 12.61 points, or 0.17 percent, to close at 7,233.69, after moving between 7,194.55 and 7,245.13 on turnover of NT$112.6 billion (US$3.76 billion).
The market opened up 0.1 percent and moved to the day’s high on follow-through buying from a 1.65 percent increase seen a session earlier, before profit-taking set in to drag the index into negative territory, dealers said.
However, some bargain hunting followed to lend support to the broader market. In particular, buying right before the closing bell helped the index return above 7,200 points at the end of the session, they said.
“The last-ditch buying in the session did reverse the early losses,” Grand Cathay Securities (大華證券) analyst Mars Hsu (徐振家) said.
“I think the support came from the government-run funds in a bid to boost the index back to the 7,200-point mark in the last session ahead of the Lunar New Year holiday,” Hsu said.
The local bourse will be closed from today to Jan. 29 for the Lunar New Year holiday.
Hsu said the early losses reflected investor caution about possible bad news over the holiday, adding that the debt crisis in Europe remained the top concern in many minds, particularly after Citigroup reported worse-than-expected earnings for the fourth quarter.
In addition, the peak of Wall Street’s earnings reporting season is expected to fall during the holiday.
“Keeping as much cash in hand as possible is the best choice at the moment,” Hsu said. “Many investors prefer to wait until the end of the holiday to get a clearer picture of the global economic climate before moving ahead.”
Nonetheless, JPMorgan Asset Management said the improving US economy and the removal of uncertainties caused by the presidential election would help the TAIEX rally after the Lunar New Year holiday.
“If major stock markets in the US and Europe keep stable during the Lunar New Year holiday, the TAIEX will have a higher chance of rallying on the first trading day after the holidays,” JPMorgan said.
The construction sector scored the highest gains among the eight major sub-indices, finishing up 1.24 percent. Machinery and electronics added 0.6 percent, cement stocks rose 0.38 percent, foodstuffs gained 0.32 percent, plastics and chemicals added 0.31 percent, and textiles closed up 0.16 percent.
However, the financial and paper and pulp sectors bucked the uptrend, closing 1.68 percent and 0.49 percent lower respectively.
Additional reporting by Amy Su