Shares in Taiwan recovered from earlier losses to close in positive territory Thursday, although the United States reported higher-than-expected inflation data overnight, which caused the initial downturn here, dealers said.
The bellwether electronics sector led the rebound as large-cap semiconductor stocks, in particular contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), bounced back from their opening lows, while the financial sector moved below its previous closing throughout the session, they said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up by 113.84 points, or 0.79 percent, at 14,438.52, after moving between 14,159.39 and 14,450.47. Turnover totaled NT$208.999 billion (US$6.99 billion).
The market opened down by 0.51 percent and fell further to reach the day’s low in the early morning session in a knee-jerk reaction to the news that the latest U.S. consumer price index (CPI), for June, had hit 9.1 percent, the highest since 1981, dealers said.
With the Taiex dipping below the nearest technical support of around 14,200 points, some investors engaged in buying, rushing to pick up tech stocks including TSMC as well as select old-economy stocks, helping the broader market overcome its earlier weakness, they said.
“Despite the high inflation data in June, many investors in the U.S. markets appeared to be composed, perhaps thinking that the June CPI growth represented the peak as prices of crude oil and other commodities like soybean and wheat have been on the decline,” Mega International Investment Services Corp. analyst Alex Huang said. “So, the major indexes there simply recovered from their lows overnight.”
On Wednesday, the Dow Jones Industrial Average fell by 0.67 percent and the tech-heavy Nasdaq index edged down by only 0.15 percent after the release of June’s CPI data, while the Philadelphia Semiconductor Index performed better, rising by 0.75 percent.
“In Taiwan, the market initially reacted to the U.S. inflation news by incurring losses but the mild reaction in the U.S. to the June CPI data prompted local investors to hunt for bargains, especially semiconductor heavyweights,” Huang said.
The electronics sector rose by 1.09 percent to close at 663.35, up from a low of 647.42, with the semiconductor sub-index rising by 1.15 percent after TSMC, the most heavily weighted stock in the local market, rose by 0.96 percent to close at NT$475.00, up from a low of NT$463.00.
TSMC’s gains came before the chipmaker released its second-quarter results, with the company posting a record high of NT$237.03 billion in net profit for the April-June period, up 16.9 percent from a quarter earlier and also up 76.4 percent from a year earlier.
Among the other semiconductor stocks that came off their lows were smartphone IC designer MediaTek Inc., which rose by 1.89 percent to end at NT$646.00; United Microelectronics Corp., a smaller contract chipmaker, increased by 1.97 percent to close at NT$38.80; and IC packaging and testing services provider ASE Technology Holding Co. rose by 2.89 percent to end at NT$78.40.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. rose by 2.44 percent to close at NT$105.00, and Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., increased by 2.42 percent to close at NT$1,905.00.
Bucking the upturn, Hon Hai’s metal casing subsidiary Foxconn Technology Co. fell by 0.53 percent to close at NT$46.80, while power management solution provider Delta Electronics Inc. ended unchanged at NT$239.50.
The financial sector underperformed the broader market as investors remained wary of their reduced asset values in the wake of falling prices of bonds they own overseas, Huang said.
In the financial sector, which fell by 0.89 percent, Fubon Financial Holding Co. fell by 0.68 percent to close at NT$58.30, Mega Financial Holding Co. dipped by 0.86 percent to end at NT$34.55, and Cathay Financial Holding Co. fell by 1.10 percent to close at NT$45.00, but CTBC Financial Holding Co. ended up by 0.23 percent at NT$22.25.
“Many old economy stocks followed their tech counterparts in recovering from lows. The transportation sector did well today but the gains were technical in nature as demand for cargo shipping services has weakened,” Huang said.
Buying rotated to container cargo shippers from airline stocks with Evergreen Marine Corp., the largest container cargo shipper, rising by 4.02 percent to close at NT$90.60, and rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. climbing by 4.29 percent and 4.41 percent, respectively, to end at NT$87.50 and NT$118.50.
However, China Airlines closed unchanged at NT$23.15, and EVA Airways dipped by 0.30 percent to end at NT$32.90.
“The earnings season in Taiwan and the U.S. has just kicked off and investors must pay close attention since the results, in particular those of tech firms, will move the markets,” Huang said.
According to the TWSE, foreign institutional investors bought a net NT$571 million worth of shares on the main board Thursday.
Source: Focus Taiwan News Channel