Taiwan shares rebound, end above 20,000 points

Taipei, April 17 (CNA) Shares in Taiwan staged a technical rebound Wednesday after plummeting a day earlier to push the Taiex above the 20,000-point mark, led by large cap tech stocks, dealers said.

The market still failed to recoup all of its losses Tuesday, however, as market sentiment remained affected by uncertainty over when the U.S. Federal Reserve might start to cut interest rates, dealers said.

The Taiex, the Taiwan Stock Exchange's benchmark weighted index, ended up 311.37 points, or 1.56 percent, at 20,213.33 after moving between 19,986.62 and 20,264.99. Turnover was NT$404.27 billion (US$12.45 billion).

The market opened up 0.43 percent and buying accelerated in the bellwether electronics sector, focusing on contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and iPhone assembler Hon Hai Precision Industry Co., dealers said.

With many investors keen to buy the dip from Tuesday, when the Taiex plunged 547.81 points, or 2.68 percent, interest also spread to select old economy stocks, in particular electric machinery and wire and cable companies, to further fuel the upturn, dealers said.

On Tuesday, the Taiex closed below 20,000-point mark for the first time since March 20, when it ended at 19,784.49.

"Today's gains were technical in nature given the tumble yesterday," Moore Securities Investment Consulting analyst Adam Lin said.

"But, as concerns over the timing of a rate cut cycle by the Fed continued to weigh on sentiment, the Taiex failed to jump over the high technical hurdle set by the 20-day moving average of 20,305 points."

The remarks made by Fed Chair Jerome Powell on Tuesday left U.S. markets mixed overnight, leaving many investors here hesitant to chase prices despite a rebound, Lin said.

Powell said there has been "a lack of further progress so far this year on returning to our 2 percent inflation goal," hinting that the current level of interest rates is likely to stay in place until inflation moves closer to the target.

The benchmark U.S. 10-year Treasury yield rose about 3 basis points to around 4.66 percent on Tuesday, which sent the tech-heavy Nasdaq index lower by 0.12 percent, while the Dow Jones Industrial Average rose only 0.17 percent.

"In Taipei, TSMC served as a driver of the Taiex's gains as investors were betting that the chipmaker will come up with positive leads at an investor conference Thursday," Lin said.

"Hon Hai also attracted strong buying to help the broader market go up further."

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After falling 2.23 percent on Tuesday, TSMC, the most heavily weighted stock in the local market, rose 2.03 percent to close at NT$804.00 Wednesday. TSMC's gains contributed about 130 points to the Taiex's rise and boosted the electronics index and semiconductor sub-index by 1.77 percent and 1.83 percent, respectively.

Hon Hai, which shed 3.42 percent Tuesday, rebounded to close 3.90 percent higher at NT$146.50.

TSMC's buying spread to other semiconductor stocks. IC packaging and testing services provider ASE Technology Holding Co. rose 1.96 percent to close at NT$156.00, and Scientech Corp, a supplier of IC packaging equipment to TSMC, rose 6.76 percent to end at NT$363.00.

United Microelectronics Corp., a smaller contract chipmaker, rose 0.40 percent to close at NT$50.30, while smartphone IC designer MediaTek Inc. lost 0.47 percent to end at NT$1,050.00.

Also in the electronics sector, AI server maker Quanta Computer Inc. rose 2.00 percent to close at NT$254.50, and power management solution provider Delta Electronics Inc. gained 2.56 percent to end at NT$300.50.

"As tech stocks are affected by volatility in Treasury yields, investors might want to park their money in select old economy sectors," Lin said.

Old economy sectors

"I favor the electric machinery and wire and cable industries, which are benefiting from the government's policy to strengthen Taiwan's electricity grid."

In the electric machinery industry, which rose 6.49 percent, Shihlin Electric & Engineering Corp., Chung-Hsin Electric & Machinery Manufacturing Corp. and Fortune Electric Co. soared 10 percent, the maximum daily increase, to close at NT$337.50, NT$209.50 and NT$950.00, respectively.

In the wire and cable industry, which gained 6.83 percent, Hua Eng Wire and Cable Co. and Ta Ya Electric Wire and Cable Co. both surged 10 percent to end at NT$40.45 and NT$58.90, respectively.

Elsewhere in the old economy sector, food brand Uni-President Enterprises Corp. rose 1.21 percent to close at NT$75.40, and edible oil brand Great Wall Enterprise Co. gained 0.72 percent to end at NT$55.60.

Bucking the upturn, Formosa Plastics Corp. lost 0.29 percent to close at NT$67.80, and Nan Ya Plastics Corp. ended down 0.90 percent at NT$55.00.

The financial sector rose 0.57 percent, with Cathay Financial Holding Co. up 0.10 percent to close at NT$47.90 and Fubon Financial Holding Co. up 0.46 percent to end at NT$66.00.

"Unless turnover expands to NT$450 billion or higher, it will not be easy for the Taiex to conquer the stiff technical resistance ahead of the 20-day moving average," Lin said. "TSMC's investor conference could serve as a catalyst of another takeoff of the broader market."

Despite the gains in the Taiex, foreign institutional investors continued to trim their holdings in Taiwan, recording a net sell of NT$22.22 billion in shares on the market Wednesday, according to the Taiwan Stock Exchange.