Taipei, Nov. 21 (CNA) Shares in Taiwan closed little changed Wednesday, rebounding from an early plunge that followed heavy losses on the U.S. markets, particularly by American tech stocks, dealers said.
As Taiwan shares dived, government-led funds apparently entered the market, while bargain hunting also emerged, which eventually helped lift share prices, dealers said.
The weighted index on the Taiwan Stock Exchange (Taiex) ended down 2.47 points, or 0.03 percent, at 9,741.52, after moving between 9,632.47 and 9,753.69. Turnover totaled NT$101.17 billion (US$3.27 billion) during the session.
The market opened down 0.47 percent and soon tumbled more than 100 points in the morning session as investors were taken aback by the steep downturn on the U.S. markets, where the Dow Jones Industrial Average fell about 550 points and the tech-heavy Nasdaq index dropped 1.70 percent Tuesday, dealers said.
The volatility of U.S. tech stocks, in particular the 4.78 percent drop in shares of Apple Inc., sparked selling in Taiwanese suppliers such as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and iPhone assembler Hon Hai Precision Industry Co., dealers said.
As the Taiex moved closer to 9,600 points, however, bargain hunters turned active, taking advantage of the low valuations in both the electronics and non-tech sectors, which helped the broader market recoup most of its early losses, dealers said.
"I think some of the buying also came from government-led funds as the authorities would want to prop up the local equity market ahead a major election like the one on Saturday," Ta Ching Securities analyst Jerry Chen said.
According to local media reports Wednesday, the labor pension has allocated NT$42 billion for investment in the stock market.
"When they saw the government-led buying, some local investors jumped on the bandwagon," Chen said. "The buying prevented the Taiex from falling below 9,616 points, which was the intraday low on Nov. 13. If the index dips below that level, technically the main board could test 9,400 points soon."
TSMC, the most heavily weighted stock on the local market, rose 0.46 percent to close at NT$219.00, after hitting an early low of NT$214.00, with 35.27 million shares changing hands.
Hon Hai, which has been affected by reports that Apple has cut back orders for its three new iPhones models, dropped 0.56 percent to close at NT$70.60, off an early low of NT$68.90.
Largan Precision Co. also recovered from an early low of NT$3,240.00 and gained 0.90 percent to end at NT$3,345.00.
With the rebound of those large cap tech stocks, the bellwether electronics sector rose 0.32 percent to close at 381.14, after hitting a low of 374.67.
Chen said bargain hunting also focused on makers of passive electronics components such as chip resistors, inductors and multi-layer ceramic capacitors (MLCC).
Among those companies, Yageo Corp. climbed 5.92 percent to close at NT$340.00 and Walsin Technology Corp. finished 5.18 percent higher at NT$172.50.
"Those stocks were favored by local investors," Chen said.
Among the non-tech stocks picked up by bargain hunters, Eclat Textile Co. rose 1.45 percent to close at NT$384.00 and Fubon Financial Holding Co. ended 0.16 percent higher at NT$50.70.
"While the main board recovered from its early dive, turnover was low as many investors appeared cautious ahead of the elections," Chen said. "Political uncertainty is still dictating market sentiment, preventing many investors from participating."
In addition, he said, the trade friction between the United States and China remained a thorny issue.
"The losses suffered by tech stocks in the U.S. indicated weakening global consumption, which could lead to more volatility in the world's financial markets," Chen said.
According to Taiex data, foreign institutional investors bought a net NT$277 million worth of shares on the main board Wednesday.
Source: Focus Taiwan News Channel