Taipei, Shares in Taiwan staged a rebound, recouping all earlier fall of over 100 points, to end above 11,000 points Tuesday as bargain hunters took to the trading floor, taking advantage of losses over the previous two sessions, dealers said.
However, the room for further gains is expected to be limited as market sentiment remains cautious at a time of global volatility in the wake of the continued spread of the new coronavirus worldwide and a plunge in international crude oil prices, they said.
The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex ended up 25.9 points, or 0.24 percent, at 11,003.54, after moving between 10,830.22 and 11,032.47, on turnover of NT$205.07 billion (US$6.85 billion).
Before Tuesday's slight gains, the local main board had lost 4.47 percent the previous two trading session.
The market opened down 0.58 percent and moved to the day's low in the mid-morning session as investors took their cue from tumbling U.S. markets, where the Dow Jones Industrial Average plummeted 2,013 points or 7.78 percent overnight on the back of a worldwide spike in confirmed cases of COVID-19, originally from the Chinese city of Wuhan, as well as a dive in crude oil prices, dealers said.
Selling hit the electronics sector amid concerns over global demand caused by the spread of the virus, while petrochemical stocks came under pressure over caution toward the energy market amid a disagreement on oil prices between Saudi Arabia and Russia, dealers added.
With the Taiex moving closer the 10,800 point level, buying emerged at around 11 a.m. to help the Taiex recover from its earlier downturn and return to positive territory by the end of the session, dealers said.
"The downturn in the previous two sessions paved the path for the rebound on the main board today," Ta Chan Securities analyst Jerry Chen said. "The buying came in particular when the Dow futures started to move higher, pointing to a possible rise at the beginning on the spot market later in the day. It seems the Dow, after a 2,000 point plunge overnight, was oversold."
Before the main board closed, Vice Finance Minister Juan Ching-hwa (???), who is executive secretary of the National Financial Stabilization Fund, urged investors to stay calm, saying if necessary, the fund would convene a meeting to decide whether to enter the market and shore up equity prices.
The NT$500 billion stabilization fund was set up in 2000 by the government to serve as a buffer against unexpected external factors disrupting the local bourse.
"Juan's statement encouraged bargain hunters to turn active since they had hopes that the government would not allow the equity market to plunge further," Chen said. "So, buying started to focus on large tech stocks as well as the petrochemical heavyweights in the late morning session."
Among the large electronics stocks that benefited from bargain hunting, Taiwan Semiconductor Manufacturing Co. the most heavily weighted stock on the local market, rose 0.49 percent to close at NT$307.00, after hitting a low of NT$301.00, with 71.79 million shares changing hands.
Also in the tech sector, iPhone assembler Hon Hai Precision Industry Co., second only to TSMC in terms of market capitalization, rose 0.38 percent to end at NT$79.40, integrated circuit designer MediaTek Inc. added 1.91 percent to close at NT$373.50, and Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., gained 1.93 percent to end at NT$4,490.00, off a low of NT$4,340.00.
The bellwether electronics sector closed up 0.58 percent at 483.96 after hitting a low of 474.90.
Chen said buying also helped major petrochemical stocks recover from their earlier weakness after a more than 20 percent fall in crude oil prices overnight in the wake of a price war between Saudi Arabia and Russia.
Nan Ya Plastics Corp. rose 0.30 percent to close at NT$66.20, off a low of NT$65.80, while Formosa Plastics Corp. fell 0.34 percent to end at NT$89.00, off a low of NT$88.10, and Formosa Petrochemical Corp. lost 1.57 percent to end at NT$81.60 after hitting a low of NT$80.00.
The financial sector fell only 0.06 percent, also on the back of bargain hunting. Cathay Financial Holding Co. gained 1.17 percent to close at NT$39.00, off a low of NT$38.30, while Fubon Financial Holding Co. ended unchanged at NT$42.35, off a low of NT$42.00.
"The rebound could continue but the Taiex is likely to see strong technical resistance ahead of 11,300 points so the room for gains will be limited," Chen said. "There has been no sign when the virus will be contained. Moreover, the energy market is expected to remain volatile."
Despite the gains in the Taiex, foreign institutional investors stayed on the sell side, registering net sales of NT$8.47 billion worth of shares on the main board Tuesday, according to the TWSE.
Source: Focus Taiwan News Channel