Taiwan shares soar up to 7,675.64 on hopes of government intervention
Shares in Taiwan staged a strong technical rebound and moved sharply higher Tuesday, as investor confidence was buoyed by expectations that the National Financial Stabilization Fund would enter the market to prop up share prices, dealers said.
The bellwether electronics sector stoked the rally, with market heavyweights such as contract chip-maker Taiwan Semiconductor Manufacturing Co. (TSMC,
) and smartphone camera lens supplier Largan Precision Co. (
) leading the way. Bargain hunters also chased financial stocks to push up the index even further, they said.
The weighted index on the Taiwan Stock Exchange (TWSE) closed up 265.30 points, or 3.58 percent, at 7,675.64, after moving between 7,368.47 and 7,677.93, on turnover of NT$120.52 billion (US$3.70 billion).
The market opened up 0.23 percent but soon fell into the red after the Dow Jones Industrial Average fell 3.57 percent overnight, dealers said.
Bargain hunters then turned active to pick up large-cap stocks in both the electronics and financial sectors on hopes that the national stabilization fund would enter the market, they said.
Market momentum accelerated midway through the morning and continued until just before the end of the session when the benchmark index hit its daily high, they said.
Vice Premier Chang San-cheng ( ) announced around noon Tuesday that the stabilization fund committee had authorized the fund to intervene in the market if necessary to mitigate the impact of volatility from global markers.
“The presence of the stabilization fund showed the government’s support for local shares,” Marbo Securities Investment Consulting analyst Chang Chih-cheng said.
“The announcement restored market confidence, luring investors to take advantage of the relatively low valuations of many stocks.
“Judging from the gains posted by large-cap stocks, governmentled funds, such as the labor pension fund, were among the bargain hunters who jumped in to chase prices,” Chang said.
In the two trading sessions before Tuesday’s rebound, the Taiexfell 7.71 percent.
Chang said TSMC, the most heavily weighted stock in the local market, was one of the biggest beneficiaries of bargain hunting because the stock had been oversold.
“As TSMC returned to an upward trend and rose sharply, the broader market was able to climb out of the doldrums,” he said.
TSMC rose 7.39 percent to close at NT$123.50, with 95.03 million shares changing hands. But Chang urged investors to beware of technical resistance for TSMC at around NT$130.00.
Among other semiconductor stocks, Siliconware Precision Industries Co. ( ), one of Taiwan’s leading integrated circuit packaging and testing services providers, rose 8.82 percent to close at NT$40.10 on follow- through buying from a earlier.
The buying came after rival Advanced Semiconductor Engineering Inc. ( ) launched a tender offer to buy an up to 25 percent stake in Siliconware, starting Monday.
ASE added 2.52 percent to end at NT$32.60.
Largan, a major Taiwanese supplier to Apple Inc., gained 10 percent, the maximum daily increase, to close at NT$2,945.00.
“As Largan is the most expensive stock here, the gains may have resulted from institutional investor interest, in particular foreign investors, who can afford such a high-priced stock,” Chang said.
Foreign Buyers Bought
According to the TWSE, foreign institutional investors bought a net NT$3.66 billion in local shares on the main board Tuesday after selling a net NT$6.6 billion in shares on Monday.
The financial sub-index also benefited from hopes of the stabilization fund’s intervention, closing up 3.62 percent at 1,000.21.
Among the big gainers, Fubon Financial Holding Co. rose 3.18 percent to close at NT$51.90, CTBC Financial Holding Co. gained 3.98 percent to end at NT$18.30, and Cathay Financial Holding Co. added 5.37 percent to end at NT$43.20.
“With the financial sub-index returning to the 1,000-point level, the sector has become technically stronger. But where the sector will go from here depends on when foreign markets will stabilize,” Chang said.