Stocks rose today, led by electronics shares, but brokers said weak turnover continues to limit the market's gains and the lack of momentum caused the market to slip from early highs by the close.
The market rose 54.13 points to 7,607.11. Turnover was NT$61.1 billion (US$1.9 billion), down from Friday's final tally of NT$66.1 billion.
"Banks rose at the opening as some investors bought on what they perceived as signals that the Ministry of Finance may consider further lowering of the bank business tax," said Austin Hung, a broker at Concord Securities.
Some have called on the MOF to cut the business tax to zero from the current 2 percent to help banks recover losses they may incur in assuming the home mortgages of those whose residences were damaged or destroyed in the Sept. 21 earthquake.
So far, the MOF has said it isn't considering cutting the tax, but Minister Chiu (
"Nonetheless, this doesn't mean that the MOF is truly considering cutting the tax. Banks came off highs as investors were cautious on whether the MOF will change its stance," Hung said.
Electronics shares rose, led by United Microelectronics (
Other sectors weakened, however, as funds moved into the market's two most liquid sectors.
"Reconstruction-oriented shares continued to face some profit-taking after strong run-ups when the market reopened after the quake," said another broker.
Traders added that continued weak turnover in the broad market is limiting gains, as thin dealings indicate many remain sidelined.
"The general perception is that the market is going to have to consolidate for a while. Many aren't overly interested in buying amidst this scenario," a local trader said.
Market watchers said the return to the 7 percent daily floor price limits yesterday from the special 3.5 percent limit put into effect for two weeks when the market reopened after the quake didn't impact the market.
A smattering of late bargain-hunting among government-related support funds helped the index close with a gain after it briefly dipped into negative territory in the last hour.
The market ended mixed, with electrical machinery shares gaining the most in percentage terms, while cement titles fell the most.
The index today is seen trading between 7,450 and 7,700 points.
The October TAIFEX Taiwan index futures contract closed at 7,586 points, versus Friday's close of 7,520 points. Volume stood at a preliminary 1,242 contracts.
Meanwhile, the October SIMEX MSCI Taiwan index futures contract ended at 337.4, up from Friday's close of 333.0 on a preliminary 4,836 contracts.
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