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Taiwan shares stage rebound as large cap stocks gain

2018/08/14 17:24:51

Taipei, Aug. 14 (CNA) Shares in Taiwan staged a technical rebound Tuesday, pushing the local main board above the 10,800 point mark by the end of trading, as large cap stocks mainly bounced back after the slump seen the previous session, dealers said.

Although share prices recovered, turnover remained moderate with market sentiment reflecting concerns that the weakness of the Turkish lira, could pave the way for more turbulence on the global market, they said.

The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex ended up 75.31 points, or 0.70 percent, at 10,824.23, after moving between 10,755.53 and 10,829.85, on turnover of NT$135.60 billion (US$4.40 billion).

The market opened up 0.46 percent as local bargain hunters jumped in, ignoring a weaker Wall Street, where the Dow Jones Industrial Average closed down 0.50 percent on Monday, marking the fourth straight day it has fallen amid worries over the financial situation in Turkey, dealers said.

Buying increased as investors continued to pick up large cap stocks such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), firms rolling out passive electronics components, like chip resistors and multi-layer ceramic capacitors (MLCC), as well as select non-tech stocks, lifting the broader market above the 10,800 point mark by the end of the session, they added.

"Today's gains were technical in nature after the Taiex plunged (2.14 percent) on Monday," Concord Securities analyst Kerry Huang said. "The moderate turnover showed investors are reluctant to chase prices for the moment as Turkey's financial crisis is still dictating investors' mood."

The freefall of Turkey's currency came amid rising trade tensions with the United States after U.S. President Donald Trump approved a proposal late last week to double tariffs on Turkish goods.

"Investors prefer to take a cautious attitude now as they fear the situation in Turkey will not be resolved any time soon and could even have contagion effects in emerging economies, sending more ripples through the global financial markets," Huang said.

Tuesday's technical rebound placed market heavyweights in focus with TSMC, the most heavily weighted stock on the local market, up 1.25 percent to close at NT$243.50 with 17.32 million shares changing hands.

Among the gaining passive component suppliers, shares in Yageo Corp. rose 6.70 percent to close at NT$637.00, and Walsin Technology Corp. added 3.28 percent to end at NT$252.00.

Bucking the upturn on the broader market, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, shed 2.98 percent to close at NT$81.30 after the company reported disappointing second quarter earnings Monday.

Buying in the electronics sector also spread to old economy stocks, in particular the cement and food sectors. Among rising large cap cement stocks, Taiwan Cement Corp. gained 2.73 percent to close at NT$43.30, and Asia Cement Corp. added 4.75 percent to end at NT$44.10 on the back of rising product prices.

In the food sector, shares in Uni-President Enterprises Corp. rose 3.88 percent to close at NT$75.00 and Ve Wong Corp. added 1.57 percent to end at NT$25.90 amid optimism over their sales during the peak summer period.

"The Taiwan dollar stabilized against the U.S. dollar today, which also led to equities buying, but investors are watching closely how the local currency moves, as that will affect fund flows," Huang said.

Despite gains on the index, foreign institutional investors stood on the sell side, registering net sales of NT$438 million worth of shares on the main board Tuesday, according to the TWSE.

(By Frances Huang)