Shares in Taiwan closed sharply higher Tuesday as the bellwether electronics sector bounced back from a slump seen a session earlier while investors ignored volatility on the U.S. markets triggered by rising concerns over the Omicron COVID-19 variant.
Old economy stocks received a boost after the Legislative Yuan extended a day trading transaction tax cut to the end of 2024, with the shipping industry a particular favorite of local investors in the day trading practice, according to dealers
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 120.16 points, or 0.68 percent, at 17,789.27, after moving between 17,652.32 and 17,825.89. Turnover totaled NT$258.57 billion (US$9.29 billion).
The market opened up 0.1 percent and continued to move in a narrow range in the early morning session. Market sentiment was affected by a 1.23 percent fall on the Dow Jones Industrial Average overnight after sharp increases in the number of Omicron variant infections worldwide, according to dealers.
But the Taiex soon regained its footing, leaving the Dow's losses behind, and rose sharply by the end of the session as large-cap tech stocks started to rebound from their losses on Monday, and the passage of the tax cut extension for day trading prompted investors to buy into old economy stocks.
"Like other regional markets, the Taipei market appeared resilient despite the heavy losses on the U.S. markets overnight. It seemed investors in the regional markets were not scared away by the Omicron spread," equity market analyst Andy Hsu said, referring to the gains posted on Tokyo, Hong Kong, and Shanghai.
"Many investors have embraced hopes that if the virus spread escalates and impacts the economy, the U.S. Federal Reserve could slow down its pace to kick off a rate hike cycle," Hsu said. "The disease cuts it both ways in the market."
Hsu said the tech sector served as a driver to the Taiex's upturn after an initial narrow range of trading as investors hunted bargains from a 1.05 percent fall on Monday.
"Although contract chipmaker TSMC (Taiwan Semiconductor Manufacturing Co.) failed to close above the previous closing level, active bargain hunting rotated to other large semiconductor stocks today," Hsu said.
TSMC, the most heavily weighted stock in the local market, fell 0.17 percent to end at NT$597.00, while the electronics sector rose 0.66 percent with the semiconductor sub-index up 0.46 percent.
"Many foreign institutional investors have been away from the trading floor for the Christmas holiday so TSMC just moved in consolidation mode," Hsu said. "Before foreign institutional investors return to keep turnover at lows, TSMC is expected to fluctuate around the NT$600.00 level in a short term."
Among other semiconductor heavyweights, United Microelectronics Corp., a smaller contract chipmaker, gained 1.13 percent to close at NT$62.90, Novatek Microelectronics Corp., which supplies drive ICs for flat panels, rose 1.33 percent to end at NT$535.00, Powerchip Semiconductor Corp., another small contract chipmaker, added 2.16 percent to close at NT$70.80, and smartphone chip designer MediaTek Inc. soared 3.32 percent to end at NT$1,090.00.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. rose 1.46 percent to close at NT$104.50, while Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., jumped 6.17 percent to end at NT$2,410.00 after foreign and local brokerages raised target prices on the stock.
In addition, Genesis Photonics Inc., a producer of flip chips for mobile flash LED device use, surged 10 percent, the maximum daily increase, to end at NT$4.32 after the company has filed a lawsuit, accusing Apple of infringing on its patents and seeking NT$210 million in compensation.
"Thanks to the Legislative Yuan's approval of the tax cut for day trading, shipping stocks also reversed their earlier losses to trend higher, pushing up the Taiex further," Hsu said.
Hsu described the shipping industry as the favorite of local investors in day trading, a practice in which investors buy and then sell the same stock or sell and then buy the same stock in one single session.
The approved bill will continue to maintain the transaction tax at 0.15 percent cut from the original 0.3 percent.
The transportation sector, in which many shipping stocks are traded, rose 1.98 percent.
Among them, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, rose 1.80 percent to close at NT$141.50, and rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. gained 2.87 percent and 4.02 percent, respectively, to end at NT$125.50 and NT$207.00.
Buying was also seen among bulk cargo shippers with Chinese Maritime Transport Ltd. up 3.70 percent to close at NT$61.70, and U-Ming Marine Transport Corp. up 5.46 percent to end at NT$63.70.
"After today's rally, the Taiex has become technically healthier, making it more likely for the index to challenge 18,000 points in the short term," Hsu said.
According to the TWSE, foreign institutional investors bought a net NT$10.65 billion worth of shares on the main board Tuesday.
Source: Focus Taiwan News Channel