Shares in Taiwan staged a strong rebound Wednesday, rising more than 370 points, as market sentiment was boosted by the National Stabilization Fund’s decision to support the hard-hit local equity market, dealers said.
Buying was seen across the board, with semiconductor heavyweights in focus, while old economy stocks and the financial sector also attracted aggressive bargain hunting, driving the broader market above the 14,300-point mark at the close, dealers said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 374.06 points, or 2.68 percent, at 14,324.68, after moving between 14,194.94 and 14,403.51. Turnover totaled NT$221.47 billion (US$7.41 billion).
The market opened sharply higher, up 1.75 percent from a 2.72 percent slump in the previous session, as investor sentiment was bolstered by the National Stabilization Fund’s decision to intervene in the equity market, dealers said.
Ignoring the losses on the United States markets overnight, investors rushed to pick up bargains, helping to push the Taiex above 14,300 points at the close, which was also higher than the five-day moving average of 14,283 points, dealers said.
“After the stabilization fund news was released yesterday, Taiex futures surged almost 400 points, and the spot market followed suit today,” Concord Securities analyst Kerry Huang said.
“In a stock market like Taipei’s, which has been battered by external negative leads such as the United States Federal Reserve’s interest rate hikes, the positive news about the stabilization fund boosted investor confidence,” Huang said.
Decision of market intervention
The Ministry of Finance (MOF) had said Monday that the stabilization fund committee had decided against an intervention in the stock market, citing Taiwan’s healthy economic fundamentals and strong exports, and the profitability of many listed companies.
After the Taiex plunged again on Tuesday, however, the committee reversed course and decided to allow the intervention of the stabilization fund in the stock market.
The NT$500 billion stabilization fund was set up in 2000 by the government to serve as a buffer against unexpected external factors that might disrupt the local bourse, and it has entered the market eight times since then.
Prior to Wednesday, the Taiex had tumbled 4,268.22 points, or 23.42 percent, this year amid volatility on the U.S. markets, geopolitical tensions, and fears over a global recession.
“Investors scrambled today to buy into the stocks that were favored by the stabilization fund in its previous interventions,” Huang said, referring to large-cap stocks such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC).
Tech stocks
TSMC, the most heavily weighted stock on the local market, rose 4.67 percent to close at NT$470.50, after plunging almost 27 percent this year prior to Wednesday.
TSMC’s gains on Wednesday contributed about 174 points to the Taiex’s rise and led the gains in the electronics sector and the semiconductor sub-index, which rose 3.25 percent and 3.98 percent, respectively.
Among other semiconductor stocks, United Microelectronics Corp., a smaller contract chipmaker, gained 3.54 percent to end at NT$38.05, and smartphone IC designer MediaTek Inc. added 3.26 percent to close at NT$634.00. Application-specific IC (ASIC) designer Alchip Technologies Ltd., however, lost 1.06 percent to finish at NT$562.00.
Also in the tech sector, iPhone assembler Hon Hai Precision Industry Co. rose 1.99 percent to close at NT$102.50, and flat panel suppliers AU Optronics Corp. and Innolux Corp. gained 4.91 percent and 7.25 percent, respectively, to end at NT$14.95 and NT$11.10.
“After the sell-offs this year, the market was full of bargains,” Huang said. “Investors were also paying attention to non-tech stocks.”
Transportation, financial sectors
In the transportation sector, which rose 2.07 percent, China Airlines climbed 4.04 percent to close at NT$23.15, and EVA Airways rose 4.27 percent to end at NT$33.00 on hopes that border controls will ease soon.
Evergreen Marine Corp., the largest container cargo shipper in Taiwan, gained 1.16 percent to close at NT$87.10, and rival Yang Ming Marine Transport Corp. finished 2.19 percent higher at NT$83.90.
The financial sector, meanwhile, rose 2.94 percent, with Fubon Financial Holding Co. gaining 5.20 percent to close at NT$58.70, and Cathay Financial Holding Co. rising 3.88 percent to end at NT$45.50.
“Despite the soaring Taiex, turnover failed to expand significantly, indicating that not many investors were willing to chase prices,” Huang said. “They remained cautious ahead of the U.S.’ inflation data for June, which is due later today, to get some clues about the Fed’s rate hike cycle.”
He said market analysts at home and abroad were also awaiting TSMC guidance for its 2022 sales and capital expenditure, which was due to be released at its investor conference on Thursday.
According to the TWSE, foreign institutional investors bought a net NT$5.70 billion worth of shares on the main board Wednesday.
Source: Focus Taiwan News Channel