Taiwan shares recoup heavy losses to edge up before Powell speech

Taipei, Aug. 23 (CNA) Shares in Taiwan closed almost flat Friday after recovering from initial weakness driven by cautious sentiment ahead of a speech planned by the U.S. Federal Reserve Chair Jerome Powell for later in the day, dealers said.

Large-cap tech stocks benefited from bargain hunting to help the broader market regain its footing by the end of the session, while transactions increased in the financial sector after Taishin Financial Holding Co. and Shin Kong Financial Holding Co. agreed to a merger deal, dealers added.

The Taiex, the benchmark weighted index on the Taiwan Stock Exchange (TWSE), ended up 9.22 points, or 0.04 percent, at 22,158.05 after moving between 21,935.98 and 22,159.27. Turnover totaled NT$304.86 billion (US$9.53 billion).

The market opened down 0.48 percent and the weakness continued to push the Taiex down.

In the mid-morning session, trading hit the day's low by more than 210 points led by the bellwether electronics sector, as investors took cues from a 1.67 percent fall on the Nasdaq index and a 3.44 percent decline on the Philadelphia Semiconductor Index overnight, dealers said.

By the afternoon, however, buying in electronics heavyweights such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) had emerged to help the tech sector and the main board rebound, dealers added.

"The initial losses on the Taiex largely reflected the tech weakness on the U.S. markets," Concord Securities analyst Kerry Huang said. "Investors at home and abroad kept alert before Powell speaks for a better guess about how the Fed will tune in its monetary policy."

Powell will address the annual economic policy symposium in Jackson Hole, Wyoming, on Friday U.S. time.

"While the markets worldwide have widely anticipated the Fed will kick off a rate cut cycle in September, how the rate cut cycle will proceed has still bothered investors," Huang said.

Huang said the electronics sector continued to dictate the local main board Friday. The electronics index closed up 0.11 percent at 1,186.95 points, off a low of 1,171.96, as the Taiex came off the day's low.

After its American depositary receipts lost 2.92 percent overnight in the U.S., TSMC, the most heavily weighted stock in the local market, lost 0.21 percent to end at NT$949.00 after hitting a low of NT$939.00.

Due to TSMC's massive investments to expand production at home and overseas, its suppliers took advantage of their relatively smaller capital size and benefited from more apparent buying in a market that moved on light turnover, dealers said.

Among them, IC assembly equipment maker solutions provider Scientech Corp. gained 3.42 percent to end at NT$468.50 and systems solution supplier Marketech International Corp. closed up 0.65 percent at NT$154.00.

Also in the semiconductor sector, IC packaging and testing services provider ASE Technology Holding Co. rose 0.33 percent to end at NT$1,505.00, while smartphone IC designer MediaTek Inc. lost 0.41 percent to close at NT$1,225.00, and United Microelectronics Corp., a smaller contract chipmaker, ended down 0.54 percent at NT$55.60.

In addition, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, also came off a low of NT$175.00 and rose 0.28 percent to close at NT$180.00. AI server maker Quanta Computer Inc. ended unchanged at NT$276.00, off a low of NT$271.00.

"The financial sector attracted much of market attention today due to a merger deal between Taishin Financial and Shin Kong Financial," Huang said, referring to about 1.26 billion Shin Kong Financial shares changing hands.

Shin Kong Financial closed unchanged at NT$12.45 after coming off a low of NT$11.65 as the merger plan, which surfaced Thursday, showed Taishin Financial will spend about NT$11.32 per share to acquire Shin Kong Financial shares, an about 9 percent discount to Shin Kong Financial's closing on Thursday.

Taishin Financial ended up 3.19 percent at NT$19.40.

Old economy industries largely moved in the doldrums throughout the session, dealers said.

The construction industry lost 1.51 percent as banks tighten lending to home buyers. In the industry, Kindom Development Co. dropped 2.75 percent to close at NT$56.60 and Highwealth Construction Corp. lost 2.61 percent to end at NT$52.20.

Elsewhere in the old economy sector, Formosa Plastics Corp. dropped 0.76 percent to close at NT$51.90, and Nan Ya Plastics Corp. fell 1.61 percent to end at NT$45.75.

"In addition to Powell's speech, investors had better keep a close eye on how the U.S. markets will react to his comments. With high correlation between the U.S. and Taiwan markets, it is critical," Huang said.

According to the TWSE, foreign institutional investors sold a net NT$1.95 billion worth of shares on the main board Friday.