Shares in Taiwan staged a strong rebound Thursday as bargain hunters became active, taking hints from a significant comeback overnight on Wall Street, where investors turned calmer after the stunning victory scored by the Republican Party's Donald Trump in the U.S. presidential election, dealers said.
Buying on the local main board pushed up the broader market, with the index rising more than 200 points by the end of the session as investors rushed to pick up large-cap stocks that had been hammered a session earlier when the news of Trump's win surfaced, the dealers said.
The weighted index on the Taiwan Stock Exchange closed up 208.98 points, or 2.34 percent, at 9,152.18 on Thursday, after moving between 9,070.64 and 9,179.18, on turnover of NT$88.57 billion (US$2.80 billion). The previous day, the index shed 2.98 percent.
The market opened up 1.42 percent in a knee-jerk reaction to the solid gains on Wall Street, where the Dow Jones Industrial Average rose 1.40 percent, the S&P 500 index gained 1.11 percent, and the tech-heavy NASDAQ also added 1.11 percent after rebounding from their day's lows, the dealers said.
Momentum on the local main board continued, with market heavyweights such as Taiwan Semiconductor Manufacturing Co. (TSMC, ???), the most heavily weighted stock in the local market, as well as many other large-cap high-tech stocks, pushing the index higher, they said.
Buying also spread to financial stocks, which followed their U.S. counterparts on hopes that Trump will reduce the regulatory burden on the banking sector, while the gains posted by old economy stocks on strong bargain hunting added momentum until the end of the session, they added.
"Yesterday's plunge in the local equity market indicated that many investors had overacted to Trump's surprise victory," Taishin Securities Investment Advisory analyst Tony Huang said. "After witnessing the latest Wall Street upturn, investors here rushed to take advantage of the losses by hunting for bargains."
"Investors seemed to be more comfortable after hearing Trump's acceptance speech, in which he focused on efforts to push the economy ahead instead of the extreme rhetoric he had used during his campaign," Huang said.
MasterLink Securities analyst Tom Tang agreed, saying that the U.S. is a mature democracy, so any president-elect is expected to act within the existing political mechanism. Before the election, the global financial markets had hoped for a win by Trump's Democratic Party rival, Hillary Clinton, as Trump has been perceived as unpredictable.
The bellwether electronics sector on the local main board closed up 2.15 percent, the semiconductor sub-index ended up 1.96 percent and the optoelectronics sub-index soared 4.61 percent.
Among the gaining high-tech stocks, TSMC, the world's largest contract chip maker, rose 1.92 percent to close at NT$185.00, off an early high of NT$188.00, with 38.23 million shares changing hands, while DRAM firm Nanya Technology Corp. (???) added 4.09 percent to end at NT$40.20 after the firm decided to take a 5.02 percent stake in its U.S. counterpart, Micron Technology Inc.
Also in the electronics sector, Largan Precision Co. (???), a smartphone camera lens supplier to Apple Inc., rose 6.14 percent to close at NT$3,545.00 to remain the most expensive stock in Taiwan, and Hon Hai Precision Industry Co. (??), an assembler of iPhones and iPads, added 1.37 percent to end at NT$81.50.
The local financial sector, which followed a 4 percent increase in the U.S. financial sector overnight, closed up 3.03 percent. Fubon Financial Holding Co. (???) rose 5.84 percent to end at NT$45.30, and Cathay Financial Holding Co. (???) gained 6.01 percent to close at NT$41.45.
"Despite today's gains, I prefer to remain cautious about the future market movement until Trump lays out his economic policy to provide clues on how the U.S. economy, the world's largest, will develop, as this will impact the global economic climate," Huang said.
Source: Focus Taiwan News Channel