Taiwan shares rebound after early tumble

2019/05/14 17:38:46 fontsize-small fontsize-default fontsize-big
Taiwan shares rebound after early tumble

Taipei, May 14 (CNA) Shares in Taiwan recovered most of their early losses Tuesday, as bargain hunting emerged to support the market amid concerns over escalating trade tensions between the United States and China, dealers said.

Many large cap stocks in the export-oriented electronics sector pulled back after the early plunge, helping the broader market overcome anxiety caused by heavy losses in United States markets.

The weighted index on the Taiwan Stock Exchange (TWSE), the Taiex, ended down 39.04 points, or 0.37 percent, at 10,519.25, after moving between 10,363,02 and 10,544.97. Turnover of NT$139.43 billion (US$4.50 billion) was recorded.

The market opened down 0.74 percent and soon dipped to the day's low in the first few minutes of trading in reaction to a 2.38 percent decline in the Dow Jones Industrial Average and a 3.41 percent decline in the tech-heavy Nasdaq overnight.

But with the Taiex falling almost 200 points, bargain hunters turned active to pick up market heavyweights, paving the way for a rebound that erased most of the early losses by the end of the session, analysts said.

"Judging from the turnaround made by large cap stocks, I suspect government-led funds stood on the buy side in a bid to bolster market confidence," Yong Cheng International Securities Investment Consulting analyst Jerry Chen said.

"Led by the buying from government-managed funds, some local investors who had previously shorted the market resumed buying, which gave an additional boost to the Taiex," Chen said.

"I think foreign institutional investors still cut their holdings today as they remained cautious about the global trade issue."

According to the TWSE, foreign institutional investors sold a net NT$9.33 billion in shares Tuesday.

The U.S. Trade Representative office on Monday released a list of US$300 billion worth of additional products imported from China on which 25 percent punitive tariffs could be imposed as the two countries seemed content to exchange threats rather than find a solution.

On Friday, Washington raised tariffs on US$200 billion worth of Chinese merchandise to 25 percent from 10 percent, and China retaliated with threats of tariffs of their own.

In the bellwether electronics sector, which ended down 0.36 percent to close at 428.30 points, off a low of 419.90, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, fell 0.80 percent to end at NT$248.50 after hitting a low of 245.00.

Integrated circuit designer MediaTek Inc. rose 0.87 percent to close at NT$289.00 after hitting a low of NT$276.50 and Largan Precision Co., a supplier of smartphone lenses to Apple Inc., gained 0.59 percent to end at NT$4,275.00, off a low of NT$4,120.00.

In addition, Genius Electronic Optical Co., a rival of Largan's, also rose 2.22 percent to end at NT$368.00 after hitting a low of NT$333.50.

"Genius is one of the favorites of local investors so its gains offered evidence that domestic bargain hunters rather than foreign investors resumed buying," Chen said.

Chen said investors who had worries over global demand rushed to buy into old economy stocks emphasizing domestic demand.

Among them, food brand Uni-President Enterprises Corp. rose 0.64 percent to close at NT$78.20, and Kindom Construction Co. gained 1.77 percent to end at NT$22.95.

"There are no signs that the U.S. and China will resolve their trade dispute any time soon so global financial markets remain haunted by the worries and Taiwan is no exception," Chen said.

"The Taiex could test the next technical support at around 10,200 points in the near term," Chen said.

(By Frances Huang)
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