Taipei, Shares in Taiwan closed moderately lower Wednesday after recovering from an early low when the benchmark weighted index briefly fell below the 10,500-point mark, dealers said.
While the bellwether electronics sector remained slow, select large cap stocks recovered from the earlier low, and certain non-high tech stocks attracted bargain hunting, lending additional support to the broader market, they said.
The weighted index on the Taiwan Stock Exchange or the Taiex ended down 19.53 points, or 0.18 percent, at 10,559.97, after moving between 10,489.20 and 10,573.73, on turnover of NT$134.81 billion (US$4.55 billion).
The market opened down 0.35 percent and soon fell to the day's low, dipping below 10,500 points as investors took their cue from a plunge on Wall Street, where the Dow Jones Industrial Average closed down 1.74 percent and the tech-heavy Nasdaq index ended down 1.70 percent, dealers said.
However, bargain hunters became active after 11 a.m., helping the Taiex recoup most of its earlier losses with large cap stocks bouncing back and preventing the broader market from falling further, they said.
"It seemed that there was strong technical support after the weighted index dipped below 10,500 points," Concord Securities analyst Kerry Huang said. "The local main board had appeared weaker than many of its counterparts in recent sessions and so a lagging Taiex appears resilient for the moment."
Huang said the Taiex fell below the nearest technical support around the 240-day moving average of 10,586 points on Tuesday and Wednesday's bargaining hunting boosted the index so it ended the session close to that level.
"If the local main board is able to recover and close above the 240-day moving average over the next few days, it is expected to turn technically healthier," he added.
While the broader market recouped most of its earlier losses, the bellwether electronics sector remained in the doldrums throughout the session after contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) presented a weaker than expected sales forecast for the second quarter last week, Huang said.
TSMC, the most heavily weighted stock on the local market, fell 0.88 percent to close at NT$225.00 after hitting a low of NT$224.00 with 46.59 million shares changing hands.
The world's largest contract chipmaker said last week that its sales for the second quarter will fall 7-8 percent from the previous quarter, while the market had previously expected second quarter sales to be little changed from the first quarter.
Bucking the downturn on the broader market, shares in iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, were boosted by bargain hunting to close up 0.25 percent at NT$80.40, off an early low of NT$79.50.
"As the electronics sector remains sluggish, I suggest that investors set their sights on non-high tech stocks," Huang said.
Old economy stocks are likely to benefit from rising product prices, while financial stocks should move higher on acquisition leads, he added.
Among gaining old economy stocks, China Steel Corp., the largest steel maker in Taiwan, rose 0.43 percent to close at NT$23.40, and China Steel Structure Corp. gained 6.09 percent to end at NT$36.60.
In the financial sector, shares in MasterLink Securities Corp. gained 10 percent, the maximum daily increase, to close at NT$11.10 after Shin Kong Financial Holding Co. announced it would boost its stake in the brokerage from 33.45 percent to 100 percent.
According to the TWSE, foreign institutional investors sold a net NT$7.18 billion worth of shares on the main board Wednesday.
Source: Focus Taiwan News Channel