Taipei, Shares in Taiwan staged a technical rebound Wednesday morning from an almost 5 percent slump on Tuesday as investors picked up confidence from gains on Wall Street overnight, dealers said.
Large cap stocks across the board, in particular in the bellwether electronics and financial sectors, got a significant boost from bargain hunters who decided to take advantage of heavy losses in the previous two sessions, they said.
As of 11:19 a.m., the weighted index on the Taiwan Stock Exchange was up 208.97 points, or 2.01 percent, at 10,612.97 on turnover of NT$111.47 billion (US$3.26 billion), rebounding from a 4.95 percent plunge a day earlier.
The rebound came after the Dow Jones Industrial Average gained 2.33 percent overnight following a 4.6 percent dive on Monday.
Shocked by massive losses on Wall Street on Friday and Monday amid rising fears that the U.S. Federal Reserve will accelerate the pace at which it raises key interest rates, the Taiex fell 722.23 points, or 6.49 percent, on the first two days of the week.
"After Wall Street stabilized to some extent, it was time for the local market to do so," MasterLink Securities analyst Tom Tang said.
"Yesterday, a lot of investors faced margin calls, which pushed down the Taiex sharply. Today, bargain hunters emerged to pick up the stocks that were hammered yesterday."
Due to strong bargain hunting, Tang said turnover for Wednesday could reach about NT$190 billion.
In the wake of the Dow's rebound, the Taiex opened up 143.64 points, or 1.38 percent, and that continued into the morning.
"Thanks to gains posted by market heavyweights, the market came out of its doldrums seen in the previous two sessions," Tang said.
Among the gaining large cap stocks, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, was up 0.84 percent at NT$241.00 with 47.86 million shares changing hands.
TSMC's American depositary receipts closed up 1.49 percent on the U.S. market overnight.
Led by TSMC, the bellwether electronics sector was up 2.47 percent.
iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, had risen 0.90 percent to NT$90.00, and Largan Precision Co., a smartphone camera lens supplier to Apple Inc., had added 8.33 percent to NT$3,705 after falling by the maximum allowed 10 percent on Tuesday.
The financial sector was up 3.02 percent with Cathay Financial Holding Co. up 3.74 percent at NT$52.70 and Fubon Financial Holding Co. up 2.64 percent at NT$50.50.
While the Dow closed higher overnight, Tuesday was a choppy session, as it fell 567.01 points early in the session before rebounding to close 567.02 points higher, a more than 1,000-point fluctuation in a single day.
"Wall Street is expected to continue to dictate global markets, including Taiwan. It remains to be seen when the U.S. market will stabilize, and investors here should be aware of possible volatility in the local market," Tang said.
"But the possible volatility down the road looks like aftershocks after a major earthquake. If the market is able to eventually stabilize, such fluctuations will be acceptable," Tang said.
Source: Focus Taiwan