Taiwan shares bounce back, led by shipping, financial stocks

Shares in Taiwan staged a technical rebound after an early tumble to return to the 15,000-point mark Tuesday as bargain hunting focused on shipping and financial stocks, dealers said.

The bellwether electronics sector underperformed, hurt by American IC designer Nvidia Corp.'s lower-than-expected earnings for the second quarter, dealers said.

The Taiex, the Taiwan Stock Exchange's benchmark weighted index, ended up 29.87 points, or 0.20 percent, at 15,050.28 after moving in a narrow range between 14,905.23 and 15,077.63. Turnover totaled NT$184.39 billion (US$6.14 billion).

The market opened down 0.37 percent and selling in the semiconductor industry escalated in the wake of a more than 6 percent fall in Nvidia shares overnight due to disappointing preliminary second quarter results, dealers said.

The broader market remained down for most of the morning, with the Taiex dipping by more than 110 points and moving closer to the 5-day and 10-day moving average of around 14,900 points before bargain hunters emerged, they said.

"Judging from today's movement, I suspect government-led funds were among the bargain hunters that jumped into the market in a bid to vault the Taiex back to the 15,000-point level amid volatility in U.S. markets," Mega International Investment Services Corp. analyst Alex Huang said.

"These bargain hunters simply rushed to pick up market heavyweights in both electronics and non-tech sectors," Huang said. "Today, shipping stocks stood out, benefiting from its recent heavy losses."

The transportation sector, in which several major shipping stocks are traded, closed up 1.36 percent at 210.88 after hitting a low of 206.15.

In the sector, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, rose 3.96 percent to close at NT$105.00 after it reported on Monday that its consolidated sales soared 36.88 percent from a year earlier to NT$62.799 billion.

Rival Yang Ming Marine Transport Corp. also gained 2.41 percent to end at NT$93.30, but Wan Hai Lines Ltd. lost 2.33 percent to close at NT$105.00.

Buying was also seen among bulk cargo shippers, with U-Ming Transport Corp. rising 0.98 percent to end at NT$41.30, and Tze Shin International Co. adding 1.22 percent to close at NT$18.00.

Huang said the strong buying in the shipping stocks reflected a recent move by Denmark-based container cargo shipper Maersk to raise its earnings forecast for the second time for 2022, citing continued port congestion.

"The financial sector also helped drive the rebound as local investment trust companies continued to raise their holdings in financial heavyweights. I think the buying orders largely came from government-led funds," Huang said.

In the financial sector, which rose 0.96 percent, E. Sun Financial Holding Co. rose 1.81 percent to end at NT$28.10, SinoPac Financial Holding Co. gained 2.02 percent to close at NT$17.70, and Mega Financial Holding Co. added 2.50 percent to end at NT$36.90.

Bucking the upturn, Fubon Financial Holding Co. lost 0.34 percent to close at NT$57.90, and Cathay Financial Holding Co. fell 0.11 percent to end at NT$46.10.

Huang said Nvidia's weaker-than-expected earnings sent ripples through the semiconductor industry, which ended down 0.53 percent, and the broader electronics sector, which finished down 0.07 percent.

Among the semiconductor heavyweights, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, lost 0.39 percent to close at NT$510.00 after hitting a low of NT$504.00.

United Microelectronics Corp. (UMC), a smaller contract chipmaker, ended unchanged at NT$41.05, while smartphone IC designer MediaTek Inc. shed 2.12 percent to close at NT$694.00.

"Nvidia's second quarter earnings primarily reflected weaker gaming products, so those stocks, including gaming PC brand Micro-Star International Co. (MSI), also suffered today," Huang said. MSI lost 2.52 percent to end at NT$116.00.

Elsewhere in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. rose 0.93 percent to close at NT$109.00, and Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., gained 1.68 percent to end at NT$2,115.00.

"While government-led funds are expected to continue to lend support to the market, investors should keep a close eye on earnings during the earnings season," Huang said.

"Also, the July consumer price index on the U.S. market due out later this week is also worth watching to get an idea of what the Fed might do next."

Despite the rebound, foreign institutional investors stood on the sell side, registering a net sell of NT$3.91 billion in shares Tuesday, according to the Taiwan Stock Exchange.

Source: Focus Taiwan News Channel