Tech-stocks retake lead on Taiwan market

Nick Land, The China Post

Taiwan’s stock market gained an additional 1.5 percent, or 68.84 points, to reach 4,589.60 yesterday. Turnover rose moderately to NT$45.3 billion from Monday’s NT$39.4 billion. Overnight gains on the U.S. NASDAQ encouraged a tech-stocks revival, although financials mostly languished, in a reversal of Monday’s abnormal pattern.

The market slowly gathered upward momentum to close near its daily high, with bargain-hunting amid chip-stocks outweighing profit-taking among financials. Despite the day’s solid progress, some dealers still envisage serious resistance at the 4,600 level.

The unimpressive performance of their U.S. listed shares did not prevent the foundry blue-chips showing local gains, with TSMC up 1.5 percent and UMC up by a robust 4.6 percent.

DRAM chipmakers also rose strongly, with Winbond Electronics going up-limit to NT$21.7, and Mosel Vitelic adding 4.6 to NT$12.65.

Financials stalled after Monday’s strong gains, although Cathay Life Insurance gained 3.6 percent on foreign buying. The “Big 3” commercial banks ended mostly flat. Reports of deteriorating July NPL figures were said to have toned down market sentiment for the sector. Other stocks ended mixed, with electricals leading the way upwards and some construction shares performing badly.

Whilst the late rally promises to kick-start today’s trade, dealers remain cautious about the medium-term market trend due to the importance of various imponderable factors. In particular the deeply uncertain schedules for U.S. economic recovery and for cross-straits liberalization measures are both crucial underpinnings to the performance of the local market, adding an inescapably speculative element to current valuations.