Local shares on Friday closed little changed after rising earlier in the session, with the market unable to remain above 10,700 points at the end of the session, dealers said.
The profit-taking that appeared late in the session reflected caution among investors due to lingering concerns over trade tensions between the US and China, even if the two sides are to hold talks later this month to resolve the dispute, which has seen both sides impose reciprocal tariffs on US$34 billion of goods, they said.
The TAIEX on Friday closed up 7.06 points, or 0.07 percent, at 10,690.96, after moving between 10,688.55 and 10,757.01, on turnover of NT$126.64 billion (US$4.11 billion). That was a drop of 2.7 percent from a close of 10,983.68 on Aug. 10.
The market opened up 0.18 percent and soon moved to the day’s high on the back of a higher Wall Street, where the Dow Jones Industrial Average ended up almost 400 points higher overnight in the wake of the negotiations planned by Washington and China, dealers said.
However, with the weighted index moving closer to the nearest technical resistance at the 240-day moving average of 10,779 points, investors started to move to the sell side to pocket their earlier gains, in particular in the bellwether electronics sector, they said.
US National Economic Council Director Larry Kudlow on Thursday said in an interview that US and Chinese officials would meet later this month to try to narrow their differences on trade issues.
“However, many investors in the region still have doubts about whether the two sides will get things settled anytime soon, so the initial upturn was eroded not only in Taipei, but also in other regional markets,” KGI Securities Co (凱基證券) analyst Phil Chu (朱有志) said, referring to markets such as Hong Kong and Shanghai.
“So even though the TAIEX moved higher in the morning, investors appeared reluctant to chase prices and some even dumped their holdings, with selling escalating in the afternoon session,” Chu said, adding that the thin turnover also demonstrated such caution.
The bellwether electronics sector faced considerable selling later in the session, with the subindex closing down 0.14 percent at 434.14, off an early high of 438.65, Chu said.
In the high-tech sector, contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the most heavily weighted stock on the local market, rose 0.21 percent to close at NT$239.50 after hitting a high of NT$241, with 18.31 million shares changing hands.
Hon Hai Precision Industry Co (鴻海精密), an assembler of Apple Inc’s iPhone that is second to TSMC in terms of market value, fell 0.12 percent to end at NT$81.10, off a high of NT$82.10, while Largan Precision Co (大立光), a supplier of smartphone camera lenses to Apple, shed 1.99 percent to NT$4,430 after hitting NT$4,650.
“Passive component stocks also faced headwinds to further cap the gains on the broader market as investors took profits in the afternoon,” Chu said.
Companies that produce passive components, such as chip resistors and multilayer ceramic capacitors, have been perceived as the favorites of local investors.
Among them, Yageo Corp (國巨) lost 4.98 percent to close at NT$630, off a high of NT$689, and rival Walsin Technology Corp (華新科技) also fell 3.33 percent to end at NT$261 after hitting NT$285.
“The silver lining was that old economy and financial stocks appeared resilient to lend some support to the broader market, or the TAIEX could have ended in negative territory,” Chu said.
Food and beverage conglomerate Uni-President Enterprises Corp (統一企業) rose 2.53 percent to close at NT$77, while Asia Cement Corp (亞泥) gained 3.39 percent to end at NT$44.25.
In the financial sector, which rose 0.47 percent, SinoPac Financial Holding Co (永豐金控) gained 1.88 percent to close at NT$10.85 and CTBC Financial Holding Co (中信金控) closed 0.95 percent higher at NT$21.15.
Foreign institutional investors on Friday sold a net NT$5.96 billion in shares on the exchange, Taiwan Stock Exchange data showed.
Elsewhere in Asia, markets on Friday mostly rose following strong leads from Wall Street and Europe, with investors cautiously optimistic about the upcoming US-China trade talks.
Tokyo’s benchmark Nikkei 225 on Friday closed up 78.34 points, or 0.35 percent, at 22,270.38, but fell 0.1 percent from 22,298.08 on Aug. 10.
Hong Kong’s Hang Seng on Friday added 113.35 points, or 0.4 percent, to close at 27,213.41, plunging 4.1 percent from a close of 28,366.62 a week earlier.
Seoul’s KOSPI on Friday also edged up 6.25 points, or 0.3 percent, to 2,247.05, shedding 1.6 percent from 2,282.79 on Aug. 10.
The Shanghai Composite on Friday bucked the regional trend, falling 36.23 points, or 1.3 percent, to 2,668.97, a sharp 4.5 percent decline from a close of 2,795.31 a week earlier.
Despite the positive wave throughout world markets after several nervous days, analysts have said a quick resolution of the trade spat between the world’s top two economies is unlikely.
Tit-for-tat tariffs by the US and China on another US$16 billion of each other’s goods are due to take effect next week, and US President Donald Trump has threatened to go after even more Chinese imports.
Markets were “cautiously optimistic” about prospects of resolving the trade war after Beijing announced it would send a representative to Washington, although National Australia Bank Ltd’s Rodrigo Catril said the “relatively low rank of the negotiators” meant the reaction was guarded.
While the US and China are talking tough, “there are reasons for both sides to come to a resolution,” Saxo Capital Markets’s Adam Reynolds told Bloomberg TV.
With a mixed mood in global markets after a troubled week, investors have taken positions in safer stocks as tensions have not completely subsided, analysts said.
“I don’t think we’re quite out of the woods yet,” State Street Global Advisors’ Marcus Miholich told Bloomberg News.
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