Taiwan shares remain resilient amid Omicron variant concerns

Shares in Taiwan remained relatively resilient Monday amid concerns over the newly detected Omicron COVID-19 variant, in the wake of a plunge on United States markets at the end of last week, dealers said.

The local main board saw strong technical support at around the 60-day moving average of about 17,165 points with bargain hunters shifting to the buy side, picking up select large tech stocks to help the broader market recoup most of its earlier losses, they said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 41.30 points, or 0.24 percent, at 17,328.09, after moving between 17,167.24 and 17,415.63. Turnover totaled NT$318.17 billion (US$11.44 billion).

The market opened down 0.28 percent and selling soon increased to push the Taiex down by about 200 points in the early morning session with investors shocked by the plunge on U.S. markets.

In the U.S., the Dow Jones Industrial Average shed 905 points or 2.53 percent and the tech-heavy Nasdaq index down 2.23 percent Friday after Omicron infections were confirmed in multiple countries, dealers said.

However, as the Taiex moved closer to the 60-day moving average, buying emerged, focusing on select tech heavyweights which vaulted the main board back into positive territory at one point before ending slightly down, they said.

"The local market reacted badly to renewed COVID-19 concerns Friday," Concord Securities analyst Kerry Huang said. "So, after an initial dive this morning, many heavyweights appeared resilient, recovering from the losses as the Taiex moved closer to technical support at around the 60-day moving average."

On Friday, the Taiex tumbled 1.61 percent after the variant was first detected in South Africa.

"Bargain hunters rushed to buy into large cap tech stocks, limiting the losses," Huang said. "I suspect government-led funds played a role in helping the Taiex recover from its low today as they did Friday."

Before the local equity market closed, Finance Minister Su Jain-rong (???) told reporters that the NT$500 billion National Stabilization Fund will keep a close eye on market movements. If necessary, the fund commission will hold a special meeting to discuss whether to enter the market and shore up share prices, he added.

National Stabilization Fund was set up in 2000 to serve as a buffer against unexpected external factors that could disrupt the local bourse.

With support from bargain hunting, the bellwether electronics sector rose 0.03 percent to close at 832.50, off a low of 822.79.

Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, lost 0.50 percent to end at NT$593.00 but came off a low of NT$591.00. TSMC received strong technical support around the 120-day moving average of NT$590.00, Huang said.

Bucking the downturn, integrated circuit designer MediaTek Inc. rose 2.49 percent to end at NT$1,030.00 after hitting a low of 991.00, and Novatek Microelectronics Corp., which supplies drive ICs for flat panels, gained 1.62 percent to close at NT$470.00, off a low of NT$456.00.

Also in the tech sector, iPhone assembler Hon Hai Precision Industry Co. ended unchanged at NT$103.50, while PC brand Acer Inc. rose 1.28 percent to close at NT$27.80.

Huang said old economy stocks largely came under pressure amid COVID-19 fears, while shipping stocks performed better with investors believing the variant virus could exacerbate port congestion and lead to a spike in freight rates.

Evergreen Marine Corp., the largest container cargo shipper in Taiwan, rose 1.27 percent to close at NT$120.00, and rivals Yang Ming Marine Transport Corp. and Wan Hai Lines added 1.38 percent and 0.66 percent, respectively, to end at NT$110.00 and NT$153.00.

In contrast, airlines stocks faced tremendous pressure as investors worried the Omicron variant will prompt countries to tighten border controls with China Airlines plunging 7.30 percent to close at NT$24.75, and EVA Airways diving 8.12 percent to end at NT$23.75.

In the financial sector, which fell 0.89 percent, Cathay Financial Holding Co. lost 0.94 percent to close at NT$73.50, and Cathay Financial Holding Co. dropped 1.50 percent to end at NT$59.30.

"While the Taiex recovered from its low today, it is too early to say whether the main board has turned stable from here. We have to watch how infectious and fatal the new virus is," Huang said.

"In addition, OPEC and its allies will meet on Dec. 2 and a decision on their output could move global financial markets," Huang added.

Despite the fall in the Taiex, foreign institutional investors bought a net NT$6.07 billion worth of shares on the main board Monday, according to the TWSE.

Source: Focus Taiwan News Channel