Taiwan shares rebound, led by financial, old economy stocks
Shares in Taiwan staged a rebound Wednesday as bargain hunters rushed to pick up financial and old economy stocks, while the bellwether electronics sector remained slow amid lingering concerns over global demand in the third quarter, dealers said.
Despite the stagnant high-tech sector as a whole, select blue chips, such as smartphone camera lens supplier Largan Precision Co. (
) and metal casing maker Catcher Technology Co. ( ) bounced back from massive losses seen in recent sessions, they said.
The weighted index on the Taiwan Stock Exchange closed up 31.41 points, or 0.36 percent, at 8,542.27, after moving between 8,486.27 and 8,563.01, on turnover of NT$85.61 billion (US$2.70 billion).
The market opened down 5.92 points and fell to the day’s low on follow-through selling from a session earlier, but with the index falling below 8,500 points, bargain hunting emerged to largely focus on the non-high tech sector to push up the broader market back into positive territory, dealers said. Strength remained until the close, they said.
Technical Support at around
8,500 Points: Analyst
“The local market had fallen sharply in recent months. It seemed that the index has found some technical support at around 8,500 points,” Mega International Investment Services Corp. analyst Alex Huang.
Since April 27, when the index hit a 2015 high of 9,793.12 points, the market had shed almost 1,300 points or about 13 percent as of Tuesday.
“So, investors moved to funds in the non-high tech sector to buy financial and old economy stocks, while they tended to avoid electronics stocks amid fears over weak market demand for the third quarter,” Huang said.
The financial sub-index closed up 0.52 percent to serve as one of the pillars to maintain the index above the previous closing level on expectations that many financial institutions will bag fat cash dividends in the third quarter from their equity investments, Huang said.
Gaining Financial Stocks
Among the gaining financial stocks, CTCB Financial Holding Co. rose 2.13 percent to close at NT$23.95, and Fubon Financial Holding Co. added 1.22 percent to end at NT$58.00, while Cathay Financial Holding Co. closed down 0.39 percent at NT$50.60.
In the old economy sector, food maker Uni-President Enterprises Corp. ( ) gained 1.60 percent to end at NT$57.00, and Formosa Plastics Corp. ( ) added 2.16 percent to close at NT$71.00.
“The electronics sector underperformed the broader market as investor sentiment has been haunted by demand concerns,” Huang said. “That’s why Taiwan Semiconductor Manufacturing Co. (TSMC,
) faced selling today.”
TSMC Fell 1.83%
TSMC, the most heavily weighted stock in the local market fell 1.83 percent to close at NT$134.00. Huang said that if TSMC shares fail to rebound, the broader market is expected to stay weak in the near future.
Also in the high-tech sector, Largan rose 1.68 percent to close at NT$3,020.00, and Catcher jumped 7.96 percent to end at NT$339.00 on bargain hunting, while Hon Hai Precision Industry Co. ( ) lost 0.56 percent to close at NT$89.00.
“Today’s thin turnover showed that many investors are reluctant to chase prices for the moment,” Huang said. “Fears over a rate hike by the U.S. Federal Reserve still kept investors at bay.”
In a Wall Street Journal report on Tuesday, Atlanta Fed President Dennis Lockhart said that U.S. economy appears ready for a rate hike in September.