Taiwan shares rebound, end above 17,200 points
Taipei, May 7 (CNA) Shares in Taiwan continued their momentum from a session earlier to move sharply higher, pushing up the benchmark index on the main board to top the 17,200-point mark, as investors were encouraged by a rally on U.S. markets overnight, dealers said.
The bellwether electronics sector led the upturn in the wake of strong bargain hunting taking advantage of a correction suffered by large tech stocks in the week's previous sessions, while large cap old economy stocks appeared mixed, as market attention focused on their tech counterparts, the dealers said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 290.64 points, or 1.71 percent, at the day's high of 17,285.00, after coming off a low of 17,032.23. Turnover totaled NT$452.57 billion (US$16.21 billion).
The market opened up 0.22 percent in the wake of an all-time high enjoyed by the Dow Jones Industrial Average, which rose 0.93 percent overnight, and buying on the local main board accelerated as bargain hunters rushed to pick up tech stocks, in particular in the semiconductor sector, on the back of a 0.77 percent rebound staged by the Philadelphia Semiconductor Index, the dealers said.
Friday's rally helped the Taiex to overcome technical resistance ahead of the five-day moving average of 17,056 points and the 20-day moving average of 17,170 points.
"Led by tech stocks on the U.S. markets, buying returned to the electronics sector, in particular among semiconductor stocks, which had been battered earlier this week," Hua Nan Securities analyst Lu Chin-wei said.
"So, as Taiwan Semiconductor Manufacturing Co. (TSMC) climbed out of its previous doldrums, the entire electronics sector, as well as the broader market, just followed," Lu said.
After its American Depositary Receipts rose 1.40 percent on the U.S. markets overnight, contract chipmaker TSMC, the most heavily weighted stock in the local market, rose 2.04 percent to close at NT$599.00, off a high of NT$600.00. The stock had dropped 2.16 percent in the previous four sessions of this week.
Led by TSMC's gains, the electronics sector and the semiconductor sub-index closed at the day's highs, up 2.66 percent and 2.43 percent, respectively.
Other semiconductor heavyweights got a boost from TSMC's upturn, with United Microelectronics Corp. a smaller contract maker, soaring 5.26 percent to end at NT$54.00. The stock had lost 9.52 percent in the previous four sessions.
In addition, memory chip supplier Nanya Technology Corp also rose 3.14 percent to close at NT$85.50 and integrated circuit packaging and testing services provider ASE Technology Holding Co. gained 5.12 percent to end at NT$113.00.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. rose 4.44 percent to close at NT$117.50 and its flat panel subsidiary Innolux Corp. jumped 10 percent, the maximum daily increase, to end at NT$26.75.
"Despite the gains, the electronics sector still accounted for less than 50 percent of the total turnover, so I expect that interest from bargain hunters in large cap tech stocks could continue," Lu said.
While the tech sector steamed ahead, Lu went on, many large old economy stocks moved in the doldrums as investors kept locking in their gains built up in recent sessions.
Among the falling old economy stocks, Taiwan Cement Corp. lost 1.32 percent to close at NT$52.30 and Universal Cement Corp. lost 2.18 percent to end at NT$24.70.
In the petrochemical sector, which was hit by a warning of a fall in product prices due to an increased supply from China, down 2.13 percent, Formosa Plastics Corp. plunged 7.08 percent to close at NT$105.00 and Formosa Chemicals & Fibre Corp. lost 3.51 percent to end at NT$90.70.
However, the shipping sector continued to ride the wave of rising freight rates, up 3.39 percent, Evergreen Marine Corp., the largest container cargo shipping company in Taiwan, rose 4.81 percent to close at NT$85.00 and rival Yang Ming Marine Transport Corp. gained 8.45 percent to end at NT$91.50.
As a market laggard, the financial sector moved up in line with the broader market, up 0.92 percent, with Cathay Financial Holding Co. up 1.29 percent to close at NT$55.10 and Fubon Financial Holding Co. up 1.72 percent to end at NT$70.80.
"The U.S. markets are expected to continue to dictate Taiwan's shares, in particular in the electronics sector, so investors had better pay close attention to the U.S. movements," Lu said. "I am also worried about a possible pullback after the Taiex stood above 17,000 points, as many major market players still want to pocket their recent gains."
According to the TWSE, foreign institutional investors bought a net NT$6.81 billion-worth of shares on the main board Friday.
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