Shares in Taiwan staged a technical rebound Friday, after suffering heavy losses in the previous session, but the upturn was limited, as investors kept a close eye on an invasion of Ukraine by Russia, dealers said.
Bargain hunting focused on large cap stocks in both the tech and old economy sectors, but the most heavily weighted stock, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), underperformed the broader market, pending the cuts in Taiwan’s weighting in the major MSCI indexes after the market close.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 57.63 points, or 0.33 percent, at 17,652.18, after moving between 17,554.97 and 17,737.32. Turnover totaled NT$386.5 billion (US$13.8 billion).
The Taiex opened up 0.13 percent and soon rose to the day’s high, as buying was sparked by a recovery Thursday of the United States markets, where the Dow Jones Industrial Average bounced back from an 859-point decline to end up 92.07 points, or 0.28 percent. The tech-heavy Nasdaq index rose 3.34 percent overnight, as investors in the U.S. shrugged off Russia’s attack on Ukraine, dealers said.
On the Taiex, early selling pushed down the index to the nearest technical support at around 17,571 points, the 120-day moving average, before buying picked up again, focusing on select semiconductor, raw material, and shipping stocks, which helped vault the main board back into positive territory by the end of the session, dealers said.
Russia-Ukraine coflicts
“Today’s rebound followed the U.S. markets’ movements, as investors seemed to think that the military conflict will be confined to Russia and Ukraine, given that the United States and Europe have moved only to impose economic sanctions on Moscow,” Cathay Futures Consulting analyst Tsai Ming-han said.
“The Taiex’s upturn was limited, however, as the market was still watching closely how the military conflict will evolve and whether the West will bring more sanctions against Russia,” Tsai added.
The U.S.’ actions include sweeping financial sanctions on Russia’s largest financial institutions and export control measures, which will cut off more than half of Russia’s high-tech imports, and restrictions on the sale of semiconductors to Russia.
While the Taiex bounced back somewhat on Friday, TSMC closed unchanged at NT$604.00, after fluctuating between NT$600.00 and NT$609.00. With TSMC finishing flat, the electronics sector showed only a 0.29 percent gain, and the semiconductor sub-index ended up 0.39 percent.
MCSI weighting cut
“The cut in Taiwan’s weighting on the major MSCI indexes prompted passive mutual funds to adjust their portfolios, and TSMC was their target ahead of the index cuts taking effect,” Tsai said.
After a quarterly index review in mid-February, MSCI lowered Taiwan’s weighting in the MSCI Emerging Markets Index, which is closely watched by foreign institutional investors, by 0.02 percentage points to 16.37 percent.
Taiwan’s weighting in the MSCI All-Country Asia ex-Japan Index was also cut, from 18.70 percent to 18.56 percent, while the country’s weighting in the MSCI All-Country World Index was raised slightly from 1.90 percent to 1.91 percent.
Other semiconductor heavyweights, however, moved higher in line with the broader market, with smartphone IC designer MediaTek Inc. gaining 2.36 percent to end at NT$1,085.00, memory chip maker Nanya Technology Corp. rising 1.05 percent to close at NT$77.10, and United Microelectronics Corp., a smaller contract chipmaker, finishing up 0.58 percent at NT$52.10.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. rose 0.49 percent to close at NT$103.00, and flat panel maker AU Optronics Corp. gained 0.98 percent to end at NT$20.55.
Old economy stocks
“With TSMC in the doldrums, buying rotated to old economy stocks,” Tsai said. “Today, raw material and shipping stocks were highlighted amid bargain hunting after their massive losses yesterday.”
The steel sector rose 2.52 percent, with China Steel Corp., the largest steel maker in Taiwan, gaining 2.13 percent to close at NT$36.00. In addition, Chung Hung Steel Corp. rose 2.92 percent to end at NT$40.50, Tung Ho Steel Enterprise Corp. climbed 4.03 percent to close at NT$69.70, and Ta Chen Stainless Pipe, Ltd. finished up 4.80 percent at NT$52.40.
In the transportation sector, which rose 1.55 percent, Evergreen Marine Corp., Taiwan’s largest container cargo shipper, rose 1.41 percent to close at NT$143.50, Yang Ming Marine Transport Corp. gained 2.67 percent to end at NT$115.50, and Wan Hai Lines Ltd. finished 2.75 percent higher at NT$187.00.
“Investors remained concerned about whether the U.S. Federal Reserve will tighten its monetary policy at its policymaking meeting in mid-March,” Tsai said. “Market sentiment has also been cautious about the actions of foreign institutional investors after yesterday’s large net sell.”
According to the TWSE, foreign institutional investors sold a net NT$51.03 billion worth of shares on the main board Friday, after a net sell of NT$53.45 billion Thursday.
Source: Focus Taiwan News Channel