Shares in Taiwan moved higher Monday on a technical rebound from the previous two trading sessions, but the gains were capped due to a late sell-off of large cap semiconductor stocks, dealers said.
Turnover also remained low as investors worried the U.S. Federal Reserve could follow a tighter monetary policy after the U.S. reported stronger than expected job data for May at the end of last week, they said.
The Taiex, the Taiwan Stock Exchange’s benchmark weighted index, ended up 53.39 points, or 0.32 percent, at 16,605.96, after moving between 16,509.01 and 16,654.12. Turnover totaled NT$210.28 billion (US$7.15 billion).
The market opened up 0.11 percent on a mild technical rebound from a 1.54 percent fall on June 1-2, the last two trading sessions of last week. The market was closed June 3 for the Dragon Boat Festival holiday.
The bellwether electronics sector and transportation stocks initially led the upturn before profit-taking emerged, while buying rotated to select old economy stocks and some financial stocks, lending support to the broader market, dealers added.
“Look at today’s turnover. I think market sentiment remained cautious after the U.S. May non-farm payroll data. Many investors appeared reluctant to chase prices for the time being,” Hua Nan Securities analyst Lu Chin-wei said.
“Fears of a more aggressive Fed continued to worry the stock market because of the strength showed by the U.S. economy.”
The U.S. reported about 390,000 jobs added in May, with the unemployment rate holding steady at 3.6 percent, well above market expectations of an increase of 318,000 new jobs created.
In addition, Cleveland Fed President Loretta Mester said in an interview with CNBC on Friday that she did not see enough evidence that inflation has peaked and is on board with supporting multiple interest rate hikes.
“Caution over a more aggressive rate hike cycle in the U.S. continues to weigh on American stock markets, and investors here are nervous that further U.S. volatility will send ripples through other stock markets, including Taiwan’s,” Lu said.
Given Monday’s thin turnover, Lu said large cap semiconductor stocks, in particular contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), failed to sustain their early gains.
TSMC, the most heavily weighted stock in the local market, closed unchanged at NT$540.00 after hitting a high of NT$544.00.
Led by TSMC, the semiconductor sub-index rose only 0.08 percent to end at 376.47, off a high of 378.61, while the electronics sector closed up 0.33 percent.
“TSMC’s movement was largely dictated by falling liquidity in the market instead of its sound fundamentals,” Lu said. “Unless turnover expands, it won’t be easy for the stock to jump above the nearest technical resistance of NT$550.00.”
Among other semiconductor stocks that retreated later in the session, smartphone IC designer MediaTek Inc. rose 0.78 percent to end at NT$905.00, and display driver IC designer Novatek Microelectronics Corp. gained 1.37 percent to close at NT$406.50.
But United Microelectronics Corp., a smaller contract chipmaker, ended at the day’s high of NT$52.00, up 2.56 percent.
Also in the electronics sector, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., soared 8.38 percent to close at NT$1,810.00 after the company said its sales growth will accelerate in June as clients start to build up inventories.
The company reported on Sunday that its consolidated sales in May rose 0.63 percent from a month earlier to NT$3.15 billion after a 17 percent month-on-month decline in April.
Dealers said Largan’s strength spread to other “Apple concept stocks” on hopes that Apple will increase its orders before the next generation of iPhones are unveiled in the fall.
Among them, iPhone assembler Hon Hai Precision Industry Co. outperformed the broader market, closing 1.32 percent higher at NT$115.50.
On Sunday, Hon Hai reported the company’s highest consolidated sales ever for the month of May at NT$497.8 billion, up 9.39 percent from a year earlier and up 2.33 percent from a month earlier.
Outside the tech sector, the transportation sector lost 0.54 percent, with Evergreen Marine Corp., the largest container cargo shipper in Taiwan, falling 0.69 percent to close at NT$143.50.
Rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. closed unchanged at NT$126.50 and NT$158.50, respectively.
“Although the transportation sector fell today, I still recommend shipping stocks as China’s phasing out of lockdowns against COVID-19 infections should push up demand for cargo shipping services and eventually boost freight rates,” Lu said.
Buying rotated to the steel industry, boosting the sub-index higher by 2.10 percent. China Steel Corp., the largest steel maker in Taiwan, rose 2.67 percent to close at NT$34.65, and Tung Ho Steel Enterprise Corp. gained 3.94 percent to end at NT$68.60.
In the financial sector, which rose 0.57 percent on the back of a rising interest rate spread, Fubon Financial Holding Co. rose 0.47 percent to close at NT$64.00, and Cathay Financial Holding Co. added 0.55 percent to end at NT$54.80.
“As the U.S. dollar continues to strengthen due to the Fed’s interest rate hikes, it is unlikely foreign institutional investors will resume heavy buying of shares in Taiwan anytime soon,” Lu said.
“I expect the Taiex will face high technical hurdles ahead of the 60-day moving average of around 16,800 points.”
Despite the rise in the Taiex, foreign institutional investors sold a net NT$2.21 billion in shares on the market Monday, according to the Taiwan Stock Exchange.
The U.S. dollar rose NT$0.027 to close at NT$29.415 against the Taiwan dollar.
Source: Focus Taiwan News Channel