Taiwan market gains on US stimulus hopes


CNA

TAIPEI — The local bourse ended higher yesterday on hopes that the United States Federal Reserve will come up with more stimulus measures to boost the economy, dealers said.

Speculation is growing that Fed Chairman Ben Bernanke will hint at further monetary easing when he delivers a report to the Senate Banking Committee Tuesday, dealers said.

The weighted index closed up 36.96 points, or 0.52 percent, at 7,127.00, after moving between 7,051.76 and 7,133.05, on turnover of NT$69.0 billion.

The market opened down 0.47 percent on follow-through selling from a day earlier, but select large cap stocks, such as smartphone vendor HTC Corp., raw material suppliers and financial firms, attracted bargain hunting to push the index back into positive territory at the end of the session, dealers said.

“Judging by the buying at home and other major regional markets, I think many investors have high hopes that the Fed will do something to stimulate the economy after Washington reported disappointing retail data overnight,” Mirae Asset Management analyst Arch Shih said.

The U.S. Department of Commerce reported overnight that retail sales fell 0.5 percent in June from a month earlier, worse than an earlier market estimate of a 0.2 percent increase.

Among the winning stocks, HTC rose 3.83 percent to end at NT$298.00 on a technical rebound after falling below NT$300 Friday. The stock saw renewed buying interest on reports that the company’s smartphones gained market share in China in May.

In the plastics and chemical sector, which was boosted by a recovery in product prices, Formosa Plastics gained 3.63 percent to NT$80.00, and Nan Ya Plastics closed up 4.68 percent at NT$55.90.

“But today’s gains simply reflected market speculation and had nothing to do with a turnaround in the economy,” Shih said. “Uncertainty over the global economy remains in place and is expected to continue to weigh on financial markets.”

Shih said he remained cautious about the world’s economic fundamentals after the International Monetary Fund lowered its global economic growth forecast for 2013 to 3.9 percent from 4.1 percent for 2013 overnight.

“It is possible for the local bourse to pull back after the latest rebound, moving lower to test technical support around the 7,000-point level soon,” Shih said, warning investors to stay away from high tech stocks that have come under pressure amid falling global demand.

In trading Tuesday, the plastics and chemical sector scored the highest gains among the eight major sectors of the market, finishing up 2.8 percent. Financials rose 1.2 percent, food shares gained 0.8 percent, and the textile and cement sectors closed up 0.7 percent.

Bucking the uptrend of the broader market, the paper and pulp sector fell 0.4 percent and machinery and electronic shares fell 0.2 percent, while construction stocks closed unchanged.