Taiwan shares rebound from recent slump, gain over 360 points

Shares in Taiwan staged a solid technical rebound Tuesday, surging more than 360 points as investors rushed to take advantage of a recent slump and pick up bargains, dealers said.

Buying focused on large-cap tech stocks, which had been battered by fears over a hawkish U.S. Federal Reserve, dealers said. The financial and old economy heavyweights also rode the waves of the rebound to lend additional support to the broader market, with the benchmark index breaching the 15,700 point mark by the end of the session, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 361.06 points, or 2.35 percent, at the day's high of 15,728.64, after coming off a low of 15,428.33. Turnover totaled NT$238.998 billion (US$8.04 billion).

Upbeat U.S. stock futures

The market opened up 0.39 percent following a 1.75 percent fall on Monday, and buying accelerated amid expectations of a higher opening on the spot market later in the day in the wake of a more than 1.3 percent increase for futures on the Dow Jones Industrial Average, dealers said.

The bellwether electronics sector, which served as an anchor to the Taiex's rebound Tuesday, rose 2.22 percent to close at the day's high of 722.59, while the semiconductor subindex also gained 1.84 percent to end at the day's high of 350.06.

"Looking at the current performance of the Dow's futures, I think many investors here were simply betting on a rebound for U.S. markets tonight," More Rich Securities Investment Consulting analyst Adam Lin said. "There was optimism that the shock from the latest rate hike by the Fed had been priced in after tumbles in share prices around the world."

The Fed raised its key interest rates by 75 basis points last week to tackle rising inflation in the United States, which hit a four-decade high of 8.6 percent in the consumer price index growth for May.

In addition, the Fed has stated that an additional 50 or 75 basis point increase in July is possible.

"The recent selling on the local main board seems to have overshot the mark, prompting investors to pick up bargains soon after the market opened," Lin said, referring to the around 1,300-point (7.82 percent) decline in the Taiex in the previous eight trading sessions amid concerns over an aggressive Fed.

Lin said the electronics sector drew significant interest throughout the session with large-cap semiconductor stocks in focus.

Lin added that these stocks had been the major victims of rising interest rates, losing their luster due to unattractive dividend yields compared with rising bond yields.

Tech stocks

Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, rose 1.41 percent to close at the day's high of NT$505.00, while United Microelectronics Corp., a smaller contract chipmaker, rose 2.60 percent to end at the day's high of NT$49.30.

In addition, smartphone IC designer MediaTek Inc. rose 3.33 percent to close at the day's high of NT$868.00, while IC packaging and testing services provider ASE Technology Holding Co. added 3.33 percent to end at NT$99.40, despite coming off a high of NT$99.50.

Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. rose 2.75 percent to close at NT$112.00, and its metal-casing subsidiary Foxconn Technology Co. gained 3.21 percent to end at NT$54.60. Power management solutions supplier Delta Electronics Inc. soared 5.68 percent to close at NT$232.50.

Smartphone brand HTC Corp. surged 10 percent, the maximum daily increase to end at NT$46.30 after Cher Wang (???), the company's chair, was named as an independent nonexecutive director by the China-based computing company Lenovo Group Ltd.

Dealers said the move by Lenovo to have Wang on board sparked speculation that the Chinese company will work with HTC in the emerging "metaverse" market, a reference to the in-vogue moniker for immersive internet technologies accessed through virtual reality and related devices.

"With the second quarter coming to an end soon, some mutual funds are also dressing up their books for the quarter by raising their holdings to boost share prices," Lin said. "In addition to tech stocks, financial and old economy stocks have become targets."

Outside tech

The financial sector rose 3.40 percent amid hopes that a widening interest spread will boost banks' bottom lines. Fubon Financial Holding Co. rose 4.98 percent to close at NT$63.20, Cathay Financial Holding Co. gained 4.63 percent to end at NT$54.20, Taiwan Cooperative Financial Holding Co. grew 3.83 percent to close at NT$27.10, and CTBC Financial Holding Co. added 3.73 percent to end at NT$26.45.

In the old economy sector, Formosa Petrochemical Corp. gained 3.33 percent to close at NT$93.90, and Nan Ya Plastics Corp. rose 1.95 percent to end at NT$83.70.

Elsewhere in the old economy sector, EVA Airways soared 10 percent to close at NT$31.55, and rival China Airlines gained 7.87 percent to end at NT$24.00 amid hopes that the government will ease border control soon to boost the tourism industry.

"Despite today's surge in the Taiex, it remains to be seen whether the main board will challenge the high technical hurdles around 16,000 points soon," Lin said. "The Taiex's strength will depend on how the U.S. markets will rebound down the road."

According to the TWSE, foreign institutional investors bought a net NT$18.17 billion worth of shares on the main board Tuesday.

Source: Focus Taiwan News Channel