The TAIEX yesterday closed higher, but gains were limited as investors remained cautious before the conclusion of the US Federal Reserve’s policymaking meeting later in the day, dealers said.
Large tech stocks continued to move in a narrow range while select old-economy stocks attracted rotational buying, giving some support to the broader market, they said.
“The Fed’s meeting was the most important factor in how regional markets, including Taipei, performed today,” Mega International Investment Services Corp (兆豐國際投顧) manager Alex Huang (黃國偉) said.
“Although the market is widely anticipating that the Fed will announce it will scale back its asset purchases, investors still wanted to know how quickly that will happen and when the purchases will end, hoping for clues on when the Fed will raise interest rates,” Huang said.
The TAIEX yesterday closed up 56.19 points, or 0.33 percent, at 17,122.16. Turnover totaled NT$326.099 billion (US$11.71 billion), with foreign institutional investors buying a net NT$3.89 billion of shares, Taiwan Stock Exchange data showed.
As the TAIEX moved closer to the next level of technical resistance at 17,200 points, investors appeared reluctant to chase prices, limiting the day’s gains and resulting in little movement in tech heavyweights, Huang said.
Contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) closed unchanged at NT$592.
“Without a breakthrough by TSMC, it was no surprise that the TAIEX remained in consolidation mode,” Huang said.
“It had nothing to do with TSMC’s fundamentals. Investors simply worried that the prospect of higher interest rates would make large tech stocks less attractive,” he said.
Huang said the bright side was that rotational buying remained active, with some electronic component makers getting a boost due to their relatively low valuations.
Among them, capacitor and resistor supplier Walsin Technology Corp (華新科技) soared 10 percent, the maximum daily increase, to close at NT$158, and Yageo Corp (國巨), the world's third-largest multilayer ceramic capacitor maker, rose 3.05 percent to close at NT$19.95.
As for the old-economy sector, the transportation industry continued its technical rebound, gaining 5.13 percent.
Evergreen Marine Corp (長榮海運) closed 6.67 percent higher at NT$112, and rivals Wan Hai Lines Ltd (萬海航運) and Yang Ming Marine Transport Corp (陽明海運) rose 6.52 percent and 6.9 percent to close at NT$171.5 and NT$108.5 respectively.
"Many investors still bet on shipping companies reporting good earnings for the third quarter due to an increase in freight rates," Huang said. "But I wouldn't suggest continuing to buy into these stocks, as their growth momentum has weakened."
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