Local shares on Friday closed slightly higher as investors moved to the sell side to lock in an earlier almost 100-point upturn following re-emerging geopolitical concerns after an Iraqi TV report that a senior Iranian military commander was killed in a US airstrike in Baghdad, dealers said.
Selling focused on select large-cap tech stocks, with contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remaining resilient on the back of late trading to lend support to the broader market, they said.
The spike in political tensions in the Middle East pushed up international crude oil prices, leading buying to shift to major petrochemical stocks, which served as an anchor to stabilize the main board, they added.
The TAIEX on Friday ended up 9.95 points, or 0.08 percent, at 12,110.43, gaining 0.2 percent from a close of 12,091.59 on Dec. 27, after moving between 12,023.60 and 12,197.64, on turnover of NT$192.78 billion (US$6.4 billion).
The market opened up 0.55 percent on follow-through buying from a session earlier, when the TAIEX closed up 0.86 percent.
Momentum continued to push the index up by almost 100 points in the early morning session, with local investors encouraged by a rally on US markets, where the Dow Jones Industrial Average soared 1.16 percent and the tech-heavy NASDAQ jumped 1.33 percent overnight on the back of the Chinese government’s stimulus to prop up its economy, the dealers said.
However, as the TAIEX moved closer to 12,200 points, some investors started to cut their holdings to lock in earlier gains and selling increased to push the index into negative territory, with local investors stunned when the Pentagon confirmed that Iranian major general Qassem Soleimani, commander of the Islamic Revolutionary Guard Corps’ Quds Force, was killed by a US drone strike, they said.
In the late trading session, some buying emerged to pick up certain large-cap tech stocks, including TSMC, as well as in the petrochemical sector, helping the broader market return to positive territory by the end of the session, they added.
“After solid gains seen last year, investors simply wanted to seize a reason to pocket their profits and the airstrike in Iraq provided them with an opportunity to sell,” Hua Nan Securities Co (華南永昌證券) analyst Kevin Su (蘇俊宏) said.
“Despite volatility during the session, the TAIEX moved throughout the session above the nearest technical support at about the five-day moving average of 12,070 points, which means that the main board remains technically healthy for the moment,” Su said.
The bellwether electronics sector fell victim to profit-taking, while the optoelectronics industry suffered heavier selling throughout the session, falling 2.18 percent by the end of the session, Su said.
Largan Precision Co (大立光), a supplier of smartphone camera lenses to Apple Inc, lost 2.98 percent to close at NT$4,880 after hitting a high of NT$5,155, while rival Genius Electronic Optical Co (玉晶光) dropped 4.3 percent to end at NT$579, off a high of NT$612.
United Microelectronics Corp (聯電), a smaller rival of TSMC, shed 1.51 percent to close at NT$16.35 and IC designer MediaTek Inc (聯發科) lost 1.59 percent to end at NT$434.50.
“The silver lining was that TSMC still ended above the previous closing level, as late-session buying vaulted the stock back into positive territory, limiting the downturn of the entire electronics sector,” Su said.
TSMC, the most heavily weighted stock on the local market, rose 0.15 percent to close at NT$339.50 after coming off a low of NT$335.50, with 41.71 million shares changing hands.
The electronics sector ended down 0.16 percent at 534.23 after hitting 529.74.
“Thanks to renewed geopolitical tensions, which boosted crude oil prices, major petrochemical stocks attracted buying, helping them climb out of their earlier weakness,” Su said. “These major petrochemical stocks commanded high weighting, otherwise the TAIEX would have had an ugly day.”
Among gaining petrochemical stocks, Formosa Petrochemical Corp (台塑石化) rose 3.06 percent to close at NT$101, Formosa Plastics Corp (台灣塑膠) gained 1.91 percent to end at NT$101.50, Formosa Chemicals & Fibre Corp (台灣化纖) rose 1.03 percent to close at NT$88.60 and Nan Ya Plastics Corp (南亞塑膠) grew 0.83 percent to end at NT$73.20.
Late-session buying also focused on other old-economy stocks, with food and beverage conglomerate Uni-President Enterprises Corp (統一企業) gaining 0.81 percent to end at the day’s high of NT$74.80.
“The New Taiwan dollar continued to appreciate against the US dollar, indicating that foreign institutional investors are continuing to move funds into the local market, so I am upbeat that the main board will benefit further from ample liquidity,” Su said.
Foreign institutional investors on Friday sold a net NT$150 million of shares on the main board, Taiwan Stock Exchange data showed.
Elsewhere in Asia, equities were mixed, having been rallying for the second day of the year on China-US trade optimism.
Hong Kong’s Hang Seng on Friday fell 92.02 points, or 0.3 percent, to 28,451.50, but jumped 0.8 percent from 28,225.42 a week earlier.
The Shanghai Composite on Friday slid 1.41 points, or 0.1 percent, to 3,083.79, a surge of 2.6 percent from a close of 3,005.04 on Dec. 27.
Singapore retreated 0.7 percent and Mumbai eased 0.5 percent.
However, Seoul’s KOSPI on Friday gained 1.29 points, or 0.1 percent, to close at 2,176.46, a decrease of 1.3 percent from 2,204.21 a week earlier.
There were also gains in Sydney, Wellington and Manila.
The Middle East crisis also comes as tensions between the US and North Korea worsen, with North Korean leader Kim Jong-un declaring that a self-imposed moratorium on nuclear and intercontinental ballistic missile tests had ended due to talks with the US going nowhere.
“We are waking up to a less safe world than it was only hours ago, especially if we combine this with simmering tension in the Korean peninsula,” AxiTrader chief Asia market strategist Stephen Innes said.
Regional energy firms were the big winners, with Santos Ltd surging more than 2 percent in Sydney and Hong Kong-listed PetroChina Co Ltd (中國石油) climbing 2.8 percent.
Markets had all been well up before news of the strike, thanks to ongoing optimism fueled by a China-US trade agreement, looser central bank monetary policies and easing Brexit worries.
“Investors are worried that the situation in Iran will worsen, since there could be some retaliation,” Mizuho Bank Ltd executive director Steven Leung said. “People will want to cut risk ahead of the weekend. Stocks have rallied a lot in the past month or so, so any bad news flow is a reason to take profit.”
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