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Taiwan shares end down but recover from early plunge

2018/11/13 17:59:08

Taipei, Nov. 13 (CNA) Shares in Taiwan closed lower Tuesday, but recovered from an early dive caused by heavy losses on U.S. markets overnight as bargain hunting set in, dealers said.

The bellwether electronics sector led the downturn as investors took their cue from tumbling tech stocks in the U.S., while buying in select old economy stocks, particularly the cement and food sectors helped the broader market stabilize, they said.

The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex closed down 55.37 points, or 0.56 percent, at 9,775.84, after moving between 9,616.16 and 9,777.35, on turnover of NT$111.87 billion (US$3.62 billion).

The market opened down 104.04 points or 1.06 percent in a reaction to U.S. markets, where the Dow Jones Industrial Average shed more than 600 points overnight, with Apple shares shedding 5.04 percent after JP Morgan cut Apple's target price, citing poor orders for the new iPhone XR, dealers said.

Selling in large cap "Apple concept stocks" accelerated, pushing down the Taiex by more than 200 points in the early morning session, but with the main board moving closer to 9,600 points, bargain hunters turned active to take advantage of the earlier plunge, which enabled the index to recoup most of its losses and close above 9,700 points, they said.

"After the recent sell-off by foreign institutional investors, it seems the local main board was oversold," Xincheng International Investment Consultant analyst Chang Chih-cheng said. "In the wake of today's earlier plunge, investors appeared more willing to hunt bargains."

Compared with the steep losses on Wall Street, Chang said, the Taipei market was more resilient falling only about 55 points Tuesday.

"The local market recovered from an early low with investors encouraged by the performance of other regional markets, which emerged from their earlier low," Chang said. "It seems that there is technical support ahead of 9,600 points for the moment."

Nevertheless, the bellwether electronics sector fell victim to the Nasdaq index, which plunged 2.78 percent, led by Apple shares which fell 5.04 percent on Tuesday.

"There are rising concerns over shipments of the more affordable new iPhone XR unveiled in September, prompting investors to dump their holdings in Apple concept stocks," Chang said referring to a report on AppleInsider, which said Apple will cut back orders from suppliers by 20-30 percent.

Among falling Apple suppliers, shares in contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, fell 1.73 percent to close at NT$227.50 after hitting a low of NT$224.50, with 36.10 million shares changing hands.

iPhone assembler Hon Hai Precision Industry lost 2.36 percent to end at NT$74.40, off a low of NT$73.80, while shares in Largan Precision Co., a smartphone camera lens supplier to Apple rose 4.92 percent to close at NT$3,200.00 after hitting a low of NT$2,875.00, the lowest the stock had been since July 7 when it closed at NT$2,975.

Bucking the downturn on the broader market, smartphone brand HTC Corp. closed up 5.19 percent at NT$44.55 after the company posted a higher gross margin for the third consecutive quarter in the third quarter.

"Bargain hunters also favored some old economy stocks in the cement and food industries amid optimism over their sales for the fourth quarter," Chang said.

Taiwan Cement Corp. gained 2.25 percent to close at NT$36.40, while Asia Cement Corp. ended unchanged at NT$33.70, off an early low of NT$32.60.

In the food sector, shares in Uni-President Enterprises Corp. rose 3.59 percent to close at NT$75.00, and Wei Chuan Foods Corp. gained 1.92 percent to end at NT$21.20.

"I suspect buying in these old economy stocks partly came from government-led funds, a move aimed at propping up the Taiex," Chang said.

According to the TWSE, foreign institutional investors bought a net NT$2.22 billion worth of shares on the main board Tuesday.

(By Frances Huang)