Taiwan shares end higher despite U.S. plunge

Shares in Taiwan moved higher on Wednesday as investors ignored heavy losses in the U.S. markets overnight after comments by the U.S. Federal Reserve chair on downsizing asset purchases, dealers said.

The bellwether electronics sector again served as the main driver of the gains on the broader market as investors rushed to pick up large-cap semiconductor stocks to push the market up by more than 150 points by the end of the session, they said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 158.23 points, or 0.91 percent, at 17,585.99, after moving between 17,374.59 and 17,626.21. Turnover totaled NT$293.696 billion (US$10.56 billion).

The market opened up 0.85 points but soon fell to negative territory in a knee-jerk reaction to a 1.86-percent drop on the Dow Jones Industrial Average overnight after Fed Chairman Jerome Powell said the American central bank would discuss speeding up the bond-buying taper at a policymaking meeting set for December, dealers said.

The Taiex soon regained its footing as buying occurred with semiconductor stocks, in particular the two major pure wafer foundry operators Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC), and interest spread to other tech stocks as well as the old economy and financial sector to help the index end above the 20-day moving average of 17,554 points by the end of the session, dealers added.

"While Powell talked about a possible move to speed up the pace to downsize the Fed's asset purchases, his comments did not involve any quicker rate hike cycle," Mega International Investment Services Corp. analyst Alex Huang said.

"Many investors here remain calm and still anticipate that the Fed will raise its key interest rates twice next year, unchanged from the previous expectations," Huang said.

After leaving Powell's remarks and the U.S. losses behind, Huang said, TSMC and UMC attracted buying amid continued optimism about their business outlook, leading the entire electronics sector as well as the broader market in moving higher.

TSMC, the most heavily weighted stock in the local market, rose 0.67 percent to close at NT$600.00 after coming off a low of NT$594.00 earlier in the day, while the stock still faced stiff technical resistance ahead of NT$600.00.

UMC, which reportedly has raised product prices for long-term contracts, soared 5.18 percent to end at the day's high of NT$67.00 after moving above the previous day's closing price throughout the session.

Led by TSMC and UMC, the electronics sector rose 1.05 percent with the semiconductor sub-index up 1.27 percent.

Buying was also seen among other semiconductor stocks with smartphone chip designer MediaTek Inc. surging 5.45 percent to close at NT$1,065.00, and Novatek Microelectronics Corp., which supplies driver ICs for flat panels, rising 3.65 percent to end at NT$482.50.

Also in the electronics sector, contract notebook computer Quanta Computer Inc. rose 2.33 percent to close at NT$87.90, and PC brand Asustek Computer Inc. increased by 2.13 percent to end at NT$360.00.

In addition, iPhone assembler Hon Hai Precision Industry Co. rose 1.93 percent to close at NT$105.50, while multilayer ceramic capacitor (MLCC) supplier Yageo Corp. fell by 1.86 percent to end at NT$465.00.

"Due to the strong showing made by many tech heavyweights, the electronics sector accounted for about 70 percent of the total turnover today," Huang said.

Non-tech stocks followed their tech counterparts in moving higher as the U.S. market losses were left behind, Huang said.

Among the old economy stocks that saw gains, food brand Uni-President Enterprises Corp. rose 2.60 percent to close at NT$67.10, textile supplier Far Eastern New Century Corp. increased by 1.43 percent to end at NT$28.30, and Taiwan Cement Corp. rose 1.30 percent to close at NT$46.60.

In the financial sector, which rose 0.83 percent as a whole, Fubon Financial Holding Co. rose 1.37 percent to close at NT$74.10, while Cathay Financial Holding Co. fell 0.17 percent to end at NT$59.90.

"After today's gains, the Taiex could see stiff technical resistance ahead of 17,650 points so the room for further gains in the short term will be limited," Huang said.

According to the TWSE, foreign institutional investors bought a net NT$8.43 billion worth of shares on the main board Wednesday.

Source: Focus Taiwan News Channel