Taipei, Feb. 25 (CNA) Shares in Taiwan closed little changed Tuesday after an early 100-point plunge triggered by a bad showing by U.S. markets overnight on novel coronavirus fears.
Bargain hunters moved in to pick up large cap stocks in the bellwether electronics sector to lead the broader market higher, while old economy and financial stocks remained in the doldrums, they said.
The weighted index on the Taiwan Stock Exchange (TWSE), the Taiex, ended up 5.36 points, or 0.05 percent, at 11,540.23, after moving between 11,415.47 and 11,567.09, on turnover of NT$153.82 billion (US$5.06 billion).
The market opened down 0.24 percent on follow-through selling from a session earlier, when the Taiex closed down 1.30 percent, and selling accelerated based on heavy losses on U.S. markets, including a 3.56 percent plunge in the Dow Jones Industrial Average.
As the Taiex fell below the nearest technical support at around 11,440 points, bargain hunters turned active and bought into tech heavyweights, in particular contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), to get the market back on track.
"It seemed that the market got solid technical support at the 120-day moving average of around 11,439 points," Mega International Investment Services Corp. analyst Alex Huang said.
"TSMC sent the electronics sector and broader market higher as bargain hunters tended to take advantage of the stock's heavy weighting in the Taiex," Huang said.
TSMC, the most heavily weighted stock in the local market, closed up 0.63 percent at NT$322.00, off an early low of NT$317.50, with 36.10 million shares changing hands.
"The stock had strong technical support at around NT$316.00, but even if a rebound continues, it is expected to see stiff resistance at a range between NT$327 and NT$328. So the room for gains is limited," Huang said.
Led by TSMC, the electronics sector closed up 0.30 percent to end at 507.81 after hitting a low of 500.76.
Among other gaining tech heavyweights, iPhone assembler Hon Hai Precision Industry Co., rose 1.98 percent to close at NT$82.30, off an early low of NT$79.90. Huang said Hon Hai had been one of the market laggards, which is why its rebound was more apparent.
Also in the tech sector, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., rose 0.43 percent to close at NT$4,630.00 after hitting a low of NT$4,570.00, and integrated circuit designer MediaTek Inc. added 0.40 percent to end at NT$378.50, off a low of NT$371.00.
"I think bargain hunting partly came from government-led funds in a bid to boost market confidence, as foreign institutional investors were still net sellers," Huang said.
According to the TWSE, foreign institutional investors sold a net NT$11.28 billion in shares Tuesday after a net sell of NT$26.34 billion in shares on Monday.
"Today's buying focused on the tech sector, while many investors still dumped old economy and financial stocks to cap the technical rebound," Huang said.
Among the falling large cap old economy stocks, Nan Ya Plastics Corp. lost 0.58 percent to close at NT$68.50, Formosa Chemicals & Fibre Corp. dropped 0.60 percent to end at NT$82.60, and Taiwan Cement Corp. shed 0.70 percent to close at NT$42.70.
In the financial sector, which closed down 0.27 percent, Cathay Financial Holding Co. fell 0.37 percent to close at NT$40.70, and Fubon Financial Holding Co. lost 0.11 percent to end at NT$44.95, while Mega Financial Holding Co. closed unchanged at NT$32.70.
"Today's gains were simply technical in nature," Huang said. "The moderate turnover showed many investors were reluctant to chase prices for now after taking into account the spread of the coronavirus and its impact on domestic and global economy.
"Investors should pay close attention to the reopening of factories in China after the Lunar New Year holiday since the COVID-19 has kept many Chinese workers from returning to their working places," Huang said.