Taiwan shares close up by 0.97% on bargain hunting


TAIPEI, CNA

Taiwan share prices closed up 0.97 percent yesterday as bargain hunters emerged to recoup early losses resulting from China’s surprise raising of benchmark interest rates the previous day, dealers said.

Taiwan’s weighted index closed up 78.39 points at 8,124.62 after moving between 7,992.81 and 8,131.19, on turnover of NT$105.06 billion.

The market opened down 0.66 percent on a reflex response to China’s rate hike, but as investors witnessed a rebound on the Shanghai market, sentiment improved and they resumed buying, with high-tech stocks particularly favored, dealers said.

A total of 2,359 stocks closed up, 1,529 fell and 286 remained unchanged.

The machinery and electronics sector scored the highest gains, up 1.56 percent. Plastics and chemical stocks rose 1.2 percent, textile firms gained 1.0 percent, cement shares closed up 0.56 percent, the construction sector rose 0.31 percent and the paper and pulp sector added 0.05 percent.

Fallers included foodstuffs down 0.81 percent and financial stocks down slightly at 0.09 percent.

The People’s Bank of China Tuesday raised its deposit and lending rates for the first time in 3 years, a move believed to curb inflation and prevent an asset bubble.

Taiwan International Securities analyst Michael Chiang said investors’ initial response showed they feared the rate hike would compromise China’s economic growth.

“But, as inflation remains a concern in China, the mainland still has room to tighten its monetary policy,” Chiang said, “So, further rate hikes are possible to attract more foreign funds into China or even into the Asian market.”

“Liquidity is likely to go higher in the long run, as this is one of the things the stock market likes best,” Chiang said.

Electronics looked cheap to investors who wanted to find a safe haven to park their money, he said, noting that investors resumed buying electronics stocks which had earlier been hit by fears of falling global demand.

It remained to be seen, however, whether the electronic sector’s strength would continue amid the cautious mood ahead of the third-quarter-earnings reports due to kick off later this month, Chiang said.

It would not be easy for the bourse to overcome strong technical resistance ahead of the 8,200-8,300 point range anytime soon, he warned.

Following recent heavy losses, Smartphone maker HTC rose 5.01 percent to NT$671.00, and optical lens firm Largan added 5.71 percent to NT$592.00.

Similarly PC vendor Acer gained 2.68 percent to NT$80.50 and Hon Hai Precision, the world’s largest electronics maker, rose 1.79 percent to NT$114.00.