Local bourse again retreats from 8,000-point level


CNA

TAIPEI — The local bourse retreated from the crucial 8,000 point mark for the second time in a week as strong technical resistance ahead of that level prevented share prices from rising further, dealers said.

Investors turned cautious, in particular after Washington reported overnight lower-than-expected existing home sales for January, with selling in the local market focusing on large-cap high-tech and financial stocks, which have made a significant showing since the beginning of the year, they said. The weighted index closed down 64.38 points or 0.80 percent at 7,937.30, after moving between 7,935.42 and 7,991.92 on turnover of NT$124.36 billion (US$4.20 billion). The market opened down 0.25 percent on an overnight fall on Wall Street and selling increased to keep the index below the previous close of 8,001.68 points throughout the trading session, the dealers said.

However, the index managed to stay well above 7,900 points by the close as some investors appeared willing to pick up bargains during the pullback, according to the dealers. “Technical hurdles have been getting higher than ever since the market breached 8,000 points yesterday,” Hua Nan Securities analyst Stan Chang said.

“The market has to go through further consolidation before it can jump the technical hurdles,” Chang said, adding that “the latest pullback came as no surprise at all.”

While finance ministers in Europe have agreed to grant bailout money to Greece to avoid an immediate default, doubts over the health of the global economy remained in place, he went on.

Chang said the disappointing U.S. home sales and recent weaker production activity data in China and Europe have raised concerns over the world’s economic fundamentals.

“Investors here simply used these negative leads to pocket profit they have up built recently and I expect the market to face further downward pressure over the next few sessions,” he said.

However, Chang said a massive sell-off is unlikely as the market remains awash in ample liquidity due to constant fund inflows.

The financial sector suffered the heaviest losses among the eight major stock categories, finishing down 1.04 percent. Machinery and electronics lost 0.93 percent, textiles fell 0.69 percent, cement stocks shed 0.66 percent, plastics and chemicals dropped 0.52 percent, and foodstuffs closed down 0.32 percent.

Bucking the downside on the broader market, paper and pulp stocks rose 0.14 percent and construction shares added 0.41 percent.

In the high-tech sector, Taiwan Semiconductor Manufacturing Co., the world’s largest contract chip maker, closed down 2.01 percent at NT$78.10, while smartphone vendor HTC gained 0.80 percent to end at NT$628.00.

Electronic paper display supplier E Ink closed down 2.79 percent at NT$43.55 amid concerns over its earnings outlook for the first quarter of this year, although the company reported a record high net profit for 2011.