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Local bourse edges higher ahead of Fed chair's testimony

Local bourse edges higher ahead of Fed chair's testimony

Taipei, May 22 (CNA) Shares in Taiwan closed slightly higher Wednesday as investors locked in gains they posted earlier in the session before U.S. Federal Reserve Chairman Ben Bernanke testified before Congress, dealers said. Investors were waiting for a clearer clue from Bernanke's testimony, scheduled for later in the day, on whether the Fed will scale down its liquidity-easing measures, the dealers said. As large-cap high-tech stocks in the electronics sector remained in the doldrums, turnover failed to expand to help the broader market overcome stiff technical resistance ahead of 8,400 points, they added. The weighted index closed up 15.79 points, or 0.18 percent, at 8,398.84 , after moving between 8,376.21 and 8,439.15, on turnover of NT$86.82 billion (US$2.91 billion). The market opened up 0.37 percent and rose to the day's high as investors took cues from the latest gains posted by Wall Street, which hit another record high overnight, the dealers said. However, profit-taking followed to erase most of the earlier gains after several electronics heavyweights, such as Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chip maker, and smartphone camera lens supplier Largan Precision Co., pulled back from recent strong showings, they said. "The local bourse is driven by rotational buying so that the market lacked a mainstream sector to push the index even higher," Mirae Asset Management analyst Arch Shih said. "Investors simply used the concerns over the possible change in the Fed's monetary policy as a reason to take profits late in the session," Shih said. "But I expect the Fed will continue to pump large funds into the market," he added. Shih pointed to the comments made by New York Fed President William Dudley that the Fed needs to rethink its current exit strategy, which raised hopes that its course will not be changed any time soon. Among the losing high-tech heavyweights, Largan fell 1.83 percent to close at NT$963.00 after a 3.81 percent rise recorded a day earlier. Funds shifted to IC inspection tool supplier Hermes Microvision Inc., which had competed with Largan for the title as the most expensive stock. Hermes ended up 0.21 percent at NT$964.00 before profit-taking cost part of the stock's earlier gains. TSMC lost 0.44 percent to close at NT$112.00, while Hon Hai Precision Industry Co., the world's largest contract electronics maker, rose 1.29 percent to end at NT$78.30. "As foreign institutional investors have built up long position contracts in the futures market, they tended to buy in the late session in a bid to prevent the index from heading south," Shih said. "But unless buying in large-cap stocks like TSMC resumes to lift turnover to NT$100 billion or higher, the local market is unlikely to climb out of the current stagnation," Shih said. (By Frances Huang)


Updated : 2021-05-12 23:52 GMT+08:00