Taipei-Shares in Taiwan closed slightly higher Friday after recouping earlier losses, with bargain hunters backing select electronics and non-tech heavyweights late in the session, dealers said.
Late buying was triggered by hopes that the U.S. Federal Reserve will cut its key interest rates at a policymaking meeting scheduled for Oct. 29-30 in response to disappointing economic data released recently in the United States, they said.
The weighted index on the Taiwan Stock Exchange (TWSE), the Taiex, rose 18.57 points, or 0.17 percent, at 10,894.48 after moving between 10,854.12 and 10,941.49. Turnover was NT$122.15 billion (US$3.95 billion).
The market opened up 0.29 percent after the Dow Jones Industrial Average rebounded from a 800-point plunge in recent two sessions to gain 0.50 percent overnight and the tech-heavy Nasdaq rose 1.1 percent on hopes of further rate cuts by the Fed, dealers said.
Once the Taiex rose above the 10,900-point mark, however, selling set in to drag the main board into negative territory.
Bargain hunters then emerged late, investing in large cap stocks such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), to help the broader market climb back into positive territory, they said.
"Investors at home and abroad are widely anticipating that the Fed will lower its key interest rates again to stimulate the U.S. economy, which is expected to boost liquidity to the equity markets," Mega International Investment Services Corp. analyst Alex Huang said.
Huang said hopes of a rate cut were raised after the U.S. Institute of Supply Management Manufacturing Index for the services sector for August fell to its lowest level since August 2016.
"Ample liquidity is one of the favorable leads in the stock market and that's why investors appeared willing to hunt bargains, lifting the Taiex out of its early doldrums," Huang said.
"Foreign institutional investors significantly cut their selling of local stocks, reflecting an upbeat mood that the market will move higher down the road. That should reinforce local investors' optimism," Huang said.
According to the TWSE, foreign institutional investors sold a net NT$841 million in shares Friday after a net sell of NT$8.74 billion on Thursday.
Huang said bargain hunting in TSMC, the most heavily weighted stock in the local market, helped the Taiex rebound from its earlier lows.
TSMC closed unchanged at NT$276.50 after hitting a low of NT$275.00, with 35.14 million shares changing hands.
Dealers said TSMC has been resilient in recent sessions amid optimism over its efforts to develop 5G and high performance computing technology.
Late session buying also lifted other market heavyweights, with iPhone assembler Hon Hai Precision Industry Co. gaining 0.97 percent to close at NT$72.90, off a low of NT$72.00.
But Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., fell 0.22 percent to close at NT$4,490.00.
Also in the electronics sector, integrated circuit designer MediaTek Inc. remained above its previous closing level throughout the session and closed 1.58 percent higher at NT$385.50 as investors hoped the company's 5G chips scheduled to hit the market later this year will drive sales growth.
Late session buying also boosted select heavyweights in the old economy and financial sectors.
Among the gaining non-tech stocks, Formosa Plastics Corp. rose 0.21 percent to close at NT$93.30, off a low of NT$92.70, and Nan Ya Plastics Corp. added 0.72 percent to end at NT$69.50 after hitting a low of NT$68.90.
In the financial sector, which closed up 0.23 percent, Shanghai Commercial and Savings Bank rose 0.69 percent to end at NT$51.60 after hitting a low of NT$51.00, and Cathay Financial Holding Co. gained 0.74 percent to close at NT$40.60, off a low of NT$40.25.
"To get a better idea of what the Fed will do, investors should pay attention to the August non-farm payroll data in the U.S. due out later in the day," Huang said.
"Also, the upcoming trade talks between Washington and Beijing, scheduled to start next week, will be an indicator of the movement of global equity markets," he said.
Source: Focus Taiwan News Channel