Taipei, Shares in Taiwan staged a technical rebound Wednesday from a plunge seen a session earlier as select large-cap stocks in both the electronics and non-high-tech sectors attracted bargain hunting, dealers said.
The gains, however, were limited, as market sentiment remained uneasy over escalating trade tension between the United States and China, as well as lingering concerns over a fund outflow from the country in the wake of weakness of the Taiwan dollar, the dealers said.
The weighted index on the Taiwan Stock Exchange, or Taiex, closed up 23.25 points, or 0.21 percent, at 10,927.44, after moving between 10,842.56 and 10,969.20, on turnover of NT$178.06 billion (US$5.90 billion).
The market opened up 0.61 points and soon fell into consolidation mode after a 1.65 percent dive a day earlier caused by fear of a possible trade war between Washington and Beijing after the two sides announced that they will impose tariffs on each other's goods, the dealers said.
With the Taiex falling below the 20-day moving average of 10,878 points at one stage, some bargain hunters emerged to pick up select heavyweights such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), as well as petrochemical stocks, to push up the broader market into positive territory by the end of the session, they said.
"There was some technical support around the 20-day moving average, so the main board bounced back," Concord Securities analyst Kerry Huang said. "It was no surprise that the market staged a rebound today."
"However, the gains were just technical in nature, as there is no sign that the trade dispute between Washington and Beijing will be resolved any time soon," Huang said. "The tension is expected to continue to dictate the global financial markets."
On Monday, U.S. President Donald Trump threatened to impose a 10 percent tariff on US$200 billion-worth of Chinese goods after China announced last week that it would slap a retaliatory 25 percent tariff on US$36 billion-worth of U.S. goods, starting July 6, and another listing of US$16 billion-worth of U.S. goods could face tariffs after a review.
"I do not expect the two sides will come to any conclusion by July 6 to improve their trade ties," Huang said.
Huang said the local main board benefited from bargain hunting, in particular in the afternoon session, as investors picked up stocks like TSMC and select non-high-tech firms, which were battered Tuesday.
TSMC, the most heavily weighted stock in the local market, rose 0.44 percent to close at NT$226.00, with 40.69 million shares changing hands. TSMC's gains contributed about 10 points to the Taiex.
Also in the electronics sector, Largan Precision Co., a smartphone camera lens supplier to Apple Inc., gained 1.26 percent to close at NT$4,405.00, while iPhone assembler Hon Hai Precision Co., second to TSMC in terms of market value, ended unchanged at NT$83.00.
In the petrochemical sector, Formosa Chemicals & Fibre Co. added 3.15 percent to close at NT$114.50, and Formosa Petrochemical Corp. rose 2.11 percent to end at NT$121.00.
Among the gaining financial stocks, Fubon Financial Holding Co. rose 1.32 percent to close at NT$53.70 and Cathay Financial Holding Co. gained 0.91 percent to end at NT$55.50.
"I suspect that government-led funds stood on the buy side today for these non-tech stocks in a bid to help the equity market emerge from a plunge seen yesterday," Huang said.
Huang said investors should continue to watch closely how the Taiwan dollar will move against the U.S. dollar at a time of a rate hike cycle by the U.S. Federal Reserve, which will affect liquidity in the equity market.
Source: Focus Taiwan News Channel