Taiwan shares edge higher after recouping early losses

Shares in Taiwan recovered most of their early losses to keep the benchmark Taiex above the 16,000-point mark on Tuesday, with strength in the financial sector leading the rebound, dealers said.

Tturnover remained moderate, however, as many investors remained cautious ahead of a two-day United States Federal Reserve meeting set to begin later Tuesday after the U.S. reported its highest increase in the consumer price index (CPI) in 40 years last week, they said.

The Taiex, the Taiwan Stock Exchange's benchmark index, ended down 23.61 points, or 0.15 percent, at 16,047.37, after moving between 15,869.06 and 16,067.80. Turnover totaled NT$226.7 billion (US$7.63 billion)

The Taiex opened down 0.60 percent to below 16,000 points in reaction to a 2.39 percent fall in the Dow Jones Industrial Average and a 3.88 percent fall in the S&P 500 index in the U.S. overnight.

Investors there were worried that the Fed may be tempted to raise interest rates more aggressively than expected because of the 8.6 percent increase in the CPI in May, dealers said.

In Taiwan, continued selling pushed the Taiex to the day's low just after 9:30 a.m. but bargain hunters started to show up at around 10 a.m. and first picked up financial stocks before turning their attention to other stocks late in the session, dealers said.

That helped the Taiex stay above 16,000-points, dealers said.

"It seemed the Taiex had strong technical support at around 16,000 points after the index fell about 1,000 points in recent sessions," MasterLink Securities analyst Tom Tang said, referring to the 942 point drop from 16,811 points, an intraday high on June 1, to Tuesday's low.

Financial stocks

"With Dow Futures on the rise, pointing to a higher opening in the U.S., investors here bet on such a rebound to hunt bargains," Tang said. "Government-led funds may have been among the bargain hunters as the financial sector is among their favorites."

The financial sector, which has been battered by massive claims on COVID-19 insurance policies, benefited from hopes that higher interest rates will widen the interest rate spread for banks, Tang said.

The financial index was up 0.69 percent to close at 1,643.97, off a low of 1,624.53.

Among the rebounding financial heavyweights, E. Sun Financial Holding Co. rose 1.90 percent to end at NT$29.45, CTBC Financial Holding Co. grew 1.76 percent to close at NT$26.00, Mega Financial Holding Co. gained 1.10 percent to end at NT$36.90, and Fubon Financial Holding Co. added 0.32 percent to close at NT$62.00.

Bucking the upturn, Cathay Financial Holding Co. closed 0.74 percent lower at NT$53.40.

"Government-led funds also took advantage of recent plunges by large cap tech stocks that had seen their valuations eroded by rising interest rates," Tang said.

Tech sector

The electronics sector lost 0.42 percent to close at 739.23 after hitting a low of 731.41, with the semiconductor sub-index down 0.55 percent.

Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, closed down 0.58 percent at NT$513.00, after hitting a low of NT$507.00.

"TSMC did well to trade above the NT$505.00 mark, an intraday low seen on May 12, throughout the session," Tang said. "I think many large cap tech stocks looked attractive due to their relatively low valuations."

Among them, iPhone assembler Hon Hai Precision Industry Co. ended unchanged at NT$111.50 after hitting NT$110.00, while United Microelectronics Corp., a smaller contract chipmaker, lost 0.80 percent to close at NT$49.60, off a low of NT$49.10.

Meanwhile, memory chip suppliers Macronix International Co. gained 1.18 percent to close at NT$38.45, and Winbond Electronics Corp. added 1.68 percent to end at NT$27.20.

Printed circuit board maker Compeq Manufacturing Co. rose 1.69 percent to close at NT$48.15, and microwave and satellite communication product supplier Microelectronics Technology Inc. gained 4.29 percent to end at NT$60.80.

Food companies, shipping firms

In the old economy sector, food brand Uni-President Enterprises Corp. lost 0.62 percent to close at NT$64.00, while Wei-Chuan Foods Corp. ended unchanged at NT$20.60.

Select shipping stocks climbed out of their doldrums seen Monday. Evergreen Marine Corp., the largest container cargo shipper in Taiwan, rose 0.77 percent to close at NT$131.50, and Yang Ming Marine Transport Corp. closed 2.49 percent higher at NT$123.50.

"Caution toward the Fed meeting still exists as markets around the world are increasingly expecting it to raise its key interest rates by 75 basis points this week," Tang said. "If so, share prices worldwide could bounce back as uncertainty over the June rate hike is removed."

According to the TWSE, foreign institutional investors sold a net NT$23.69 billion in shares Tuesday.

Source: Focus Taiwan News Channel