Taiwan shares reverse earlier losses, end moderately up

Taipei, April 18 (CNA) Shares in Taiwan recouped all earlier losses caused by increased volatility on U.S. markets overnight as bargain hunters rushed to buy in the latter part of the session, dealers said.

However, the gains were capped as concerns grow over the possibility of the Federal Reserve delaying a rate cut cycle in the wake of Washington's recent hotter than expected inflation reports, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 87.87 points, or 0.43 percent, at 20,301.20 after moving between 20,057.81 and 20,363.09. Turnover totaled NT$448.49 billion (US$13.84 billion).

The market opened down 0.43 percent and selling increased, led by the bellwether electronics sector, as investors took their cue from a 1.15 percent decline on the tech-heavy Nasdaq index and a 3.25 percent drop on the Philadelphia Semiconductor Index overnight, dealers said.

Mid-session rebound

With the Taiex dipping to the day's low by about 156 points in the mid-morning session, buying reemerged with large cap tech stocks, such contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and iPhone assembler Hon Hai Precision Industry Co., in focus, dealers added.

Along with strong interest in old economy stocks which benefited from the government's plans to improve electricity supplies and develop green energy, bargain hunting in the tech sector helped the broader market return to positive territory by the end of the session, dealers said.

"The Taiex staged the second consecutive rebound today after the main board plunged more than 500 points on Tuesday," Hua Nan Securities analyst Kelvin Su said. "It seems the index saw solid support at around 20,000 points despite heavy losses on U.S. markets overnight."

On Tuesday, the Taiex shed 2.68 percent to end below 20,000 points before making a comeback, rising 1.56 percent to return above that level Wednesday.

"Bargain hunters scrambled to pick up tech heavyweights by taking advantage of the stocks' earlier losses," Su said.

Tech stocks

Among them, TSMC, the most heavily weighted stock on the local market, closed unchanged at NT$804.00 after hitting a low of NT$792.00.

"Judging from the buying in TSMC, I think investors were betting the chipmaker will come up with positive leads from an investor conference this afternoon," Su said.

Before the investor conference opened, TSMC released its first quarter results, which said net profit for the first quarter of this year was up almost 9 percent from a year earlier after posting its highest-ever first-quarter sales.

Hon Hai, second to TSMC in terms of market value, gained 2.83 percent to end at NT$148.00, off a low of NT$144.50 as local media reported earlier Thursday that the company will intensify efforts to work with American chip designer Nvidia Corp. on artificial intelligence application development.

Buying rotated to other AI related stocks, Su said. AI server maker Wistron Corp. rose 3.06 percent to close at NT$118.00, and Wistron's cloud application subsidiary, Wiwynn Corp. also gained 4.60 percent to end at NT$2,520.00, but Quanta Computer Inc., another AI server supplier, lost 1.57 percent to close at NT$250.50.

Electronic component suppliers also rode the wave of rotational buying to fuel the gains of the broader market with power management solution provider Delta Electronics Inc. up 2.83 percent to end at NT$309.00, and Hon Hai's connector affiliate Cheng Uei Precision Industry Co. up 4.05 percent to close at NT$46.25.

Old economy sector

"The old economy sector also served as a driver to today's upturn on the Taiex," Su said. "I think local investors favored stocks in the supply chain for public electricity infrastructure projects as the government is keen to improve the power grid network nationwide."

In the wire and cable industry, which rose 3.90 percent, Hua Eng Wire and Cable Co., Ta Ya Electric Wire & Cable Co. and China Wire & Cable Co. soared 10 percent, the maximum daily increase, to close at NT$44.45, NT$44.70 and NT$51.20, respectively.

On the back of the government's efforts to develop renewable energy, Luxe Green Energy Technology Co. gained 4.52 percent to end at NT$38.15.

The construction index rose 4.02 percent on expectations that a 7.2 magnitude earthquake that hit off the coast of Hualien on April 3 boosted demand for reconstruction, Hsu said.

Among the winning construction stocks, BES Engineering Co. and Radium Life Tech Co. surged 10 percent to close at NT$16.80, and NT$11.45, respectively. In addition, Huang Hsiang Construction Corp. added 5.13 percent to end at NT$52.30.

U.S. rate cuts?

"While the main board recovered from the earlier weakness today, many local investors remained cautious about the timing of when the Fed will start to cut interest rates so they appeared reluctant to chase prices for the moment," Su said.

"Due to insufficient turnover, the Taiex has seen strong technical resistance ahead of the 20-day moving average of 20,326 points," he said.

Despite the gains on the Taiex, foreign institutional investors sold a net NT$6.66 billion worth of shares on the main board Thursday, according to the TWSE.