Local market rebounds, led by large-cap stocks low valuation
Shares in Taiwan bounced back Thursday as bargain hunters turned active, taking advantage of the relatively low valuation of large-cap stocks after a recent selloff by foreign institutional investors, dealers said.
Driven by the bargaining hunting, the bellwether electronics and financial sectors led the rise of the broader market, which closed above the 9,600- point mark for the first time in five days, dealers said. Petrochemical stocks also attracted buying in reflection of a rebound in international crude oil prices overnight, they said.
Despite the gains in the index, however, the trading volume did not expand significantly as many investors were reluctant to chase prices ahead of the upcoming four-day Tomb Sweeping Festival, which will starts Friday, dealers said.
The weighted index on the Taiwan Stock Exchange closed up 92.66 points, or 0.97 percent, at 9,600.32, after moving between 9,535.98 and 9,628.95. Turnover totaled NT$92.43 billion (US$2.96 billion) during the session.
The market opened up 0.40 percent and gained steam as market heavyweights such as Taiwan Semiconductor Manufacturing Co. (TSMC, ) and other hightech stocks emerged from their recent slowdown and investors ignored a drop on Wall Street overnight, dealers said.
As the index breached 9,600 points and moved toward the nearest technical resistance at around 9,650 points, however, the gains were limited by the end of the session, they said.
Technical Rebound: Analyst
“I think today’s gains were simply technical in nature,” said Alex Huang, an analyst at Mega International Investment Services Corp. After the pressure placed on the local market by foreign institutional investors in the past few sessions, some of them turned to pick up bargains for trading purposes, Huang said.
“Although the local market has technically improved after today’s gains, it still needs more time to consolidate as many investors re- main cautious about the upcoming earnings season on Wall Street,” he said.
Huang noted that that the rebound on the local main board was led largely by market heavyweights.
“Judging from the gains posted by those big guys, I suspect that foreign institutional investors were the main buyers today,” he said
Foreign Investors Buy
According to the TWSE, foreign institutional investors bought a net NT$5.27 billion worth of local shares Thursday after a net sell of NT$45.8 billion in the previous seven sessions.
Among the stocks, TSMC, gaining high-tech the most heavily weighted stock on the local market, rose 2.08 percent to close at NT$ 147.00 with 49.28 million shares changing hands. Huang said. He said that TSMC, however, may reach a technical ceiling of around NT$155 ahead of its April 16 investor conference.
“Unless TSMC’s first quarter results and second quarter guidance surprise the market, it would be hard for the stock to make a breakthrough any time soon,” Huang said.
Integrated circuit packaging and testing services provider Advanced Semiconductor Engineering Inc. ( ) gained 1.79 percent to end at NT$42.70, and rival Siliconware Precision Industries Co. (
) climbed 2.18 percent to close at NT$51.60.