The TAIEX closed lower yesterday as investors chose to pocket gains from the previous two sessions, but losses were limited by a rally in the final two hours of trading boosted by strong market liquidity, dealers said.
While large-cap tech stocks, including contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), felt pressure, optoelectronics stocks, such as smartphone camera lens supplier Largan Precision Co (大立光), and select old-economy stocks drew interest, they said.
The TAIEX closed down 83.13 points, or 0.51 percent, at 16,341.38 on turnover of NT$346.82 billion (US$12.24 billion).
“It was not surprising that the market pulled back today after a strong showing on Wednesday, as many investors tended to pocket their gains,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang (黃國偉) said.
“Despite the fall, the market remained technically sound as the TAIEX managed to close above 16,197 points, the intraday low on Wednesday,” Huang said.
On Wednesday, the first trading day after the 11-day Lunar New Year holiday, the TAIEX soared 3.54 percent, as the market played catch-up with the gains posted on US markets during the holiday break, before gaining another 0.38 percent on Thursday.
“Downward pressure focused on certain tech heavyweights, in particular TSMC, which served as the major driver of the upturn in recent sessions,” Huang said.
TSMC, the most heavily weighted stock in the local market, fell 1.21 percent to close at NT$652, after hitting a low of NT$647.
Dragged down by TSMC, the bellwether electronics sector and the semiconductor sub-index fell 0.74 percent and 1.21 percent respectively.
Other semiconductor stocks also lost ground, with smaller contract chipmaker United Microelectronics Corp (聯電) closing 1.72 percent lower at NT$57.20, and IC designer MediaTek Inc (聯發科) falling 1.43 percent to close at NT$964.
Nanya Technology Corp (南亞科技) bucked the downturn, gaining 3.45 percent to close at NT$93.00 after a Japanese brokerage upgraded its target price for the stock because of strong demand for DRAM chips.
“The silver lining was that there was still plenty of liquidity, so investors were willing to park their money in some market laggards, which made the TAIEX resilient,” Huang said.
Among the stocks favored by bargain hunters, Apple Inc supplier Largan rose 4.77 percent to close at NT$3,405, and rival Genius Electronic Optical Co (玉晶光) gained 2.72 percent to close at NT$510.00.
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