Shares in Taiwan staged a strong rebound, rising almost 280 points Wednesday, after the slump seen in the previous two sessions, as sentiment improved in the wake of reduced geopolitical tensions between Russia and Ukraine, dealers said.
Buying was seen across the board with the bellwether electronics sector in focus as large semiconductor stocks, in particular contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), led the upturn, pushing the main board above 18,200 points after bargain hunters returned, they said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 279.66 points, or 1.56 percent, at 18,231.47 after moving between 18,109.17 and 18,233.79. Turnover totaled US$269.02 billion (US$9.65 billion).
Overnight rally on U.S. markets
The market opened up 0.88 percent and buying accelerated as investors took their cue from a rally on U.S. markets, where the Dow Jones Industrial Average rose 1.22 percent and the tech-heavy Nasdaq index gained 2.53 percent overnight, as Russia claimed it had begun returning some troops to deployment bases after training exercises near the Ukrainian border, dealers said.
Following tech stock gains on U.S. markets, the local electronics sector attracted strong interest and remained strong until the end of the session with last ditch buying boosting semiconductor heavyweights like TSMC even more at the end of the session, dealers added.
“Like other regional markets, the Taipei market simply followed U.S. markets to make a technical comeback today as many investors seemed relieved amid reduced fears over an immediate breakout of war between Russia and Ukraine,” Concord Securities analyst Kerry Huang said.
After the White House issued a warning last week, saying a war in Ukraine could start “any day now” and urged Americans there to leave “immediately,” the local main board lost 359.13 points or 1.96 percent in the previous two sessions.
“The electronics sector fell victim to such geopolitical fears in the past two sessions. Today, bargain hunters just returned to pick up large cap tech stocks, in particular in the semiconductor industry,” Huang said.
Tech stocks
TSMC, the most heavily weighted stock on the local market, rose 2.05 percent to close at the day’s high of 646.00 after its American depositary receipts soared 3.97 percent overnight. Led by TSMC, the electronics index rose 1.90 percent with the semiconductor sub-index up 2.03 percent.
“TSMC could soon encounter technical resistance ahead of the 20-day moving average of NT$648.00, while the company remains fundamentally sound,” Huang said.
Buying spread to other semiconductor stocks with application specific IC (ASIC) designer Alchip Technologies, Ltd. soaring 10 percent, the daily maximum limit, to end at NT$1,165.50, smartphone chip designer MediaTek Inc. increasing by 2.73 percent to close at NT$1,130.00, and IC packaging and testing service provider ASE Technology Holding Co. rising 2.50 percent to end at NT$102.50.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. rose 1.44 percent to close at NT$105.50, and power management solution provider Delta Electronics Inc. gained 1.97 percent to end at NT$258.50.
Transportation sector
“The transportation sector also served as a driver to the upturn, with airline stocks spotlighted on hopes of border control easing,” Huang said, referring to a plan announced by the Central Epidemic Command Center Monday to shorten quarantine for people arriving in Taiwan and ease border restrictions for business travelers.
The transportation sector rose 1.96 percent with China Airlines up 5.46 percent to close at NT$28.95, and rival EVA Airways up 1.28 percent to end at NT$31.65.
Evergreen Marine Corp., the largest container cargo shipper in Taiwan, rose 1.14 percent to close at NT$133.50, and rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. gained 1.35 percent and 2.80 percent, respectively, to end at NT$112.50 and NT$183.50. Their gains gave another boost to the transportation sector, Huang said.
Elsewhere in the old economy sector, Formosa Plastics Corp. rose 2.40 percent to close at NT$106.50 and Nan Ya Plastics Corp. gained 1.60 percent to end at NT$88.80. In addition, China Steel Corp., the largest steel maker in Taiwan, added 1.14 percent to close at NT$35.45, and China Steel Structure Corp. rose 1.33 percent to end at NT$60.90.
Financial stocks
In the financial sector, which rose 0.67 percent, Fubon Financial Holding Co. increase 1.57 percent to close at NT$77.80, and Cathay Financial Holding Co. added 0.78 percent to end at NT$64.80.
The U.S. Federal Reserve is scheduled to release the minutes of its last policymaking meeting held in January on Thursday morning Taipei time, Huang said.
“The minutes are important for more clues about how the Fed will raise its key interest rates at the next meeting set for March and how the central bank will cut its balance sheet down the road, which will move global financial markets,” Huang said.
According to the TWSE, foreign institutional investors bought a net NT$8.47 billion worth of shares on the main board Wednesday.
Source: Focus Taiwan News Channel