Taipei, Taiwan shares staged a strong technical rebound Monday morning, soaring more than 100 points, as the main board took a pause from recent weakness caused by trade friction between the United States and China, dealers said.
Investors rushed to pick up large cap stocks, in particular in the bellwether electronics sector, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), pushing up the broader market to top the 240-day moving average of 10,722 points, they said.
Smartphone brand HTC Corp. recovered from its earlier low, although the company reported on Friday that it posted a more than 60 percent year-on-year decline in sales for June, dealers said.
As of 11:50 a.m., the weighted index on the Taiwan Stock Exchange had gained 126.60 points, or 1.19 percent, at 10,735.17 on turnover of NT$94.68 billion (US$3.11 billion).
"Wall Street posted gains at the end of last week, while Washington announced the imposition of tariffs on US$34 billion worth of Chinese goods as scheduled," MasterLink Securities analyst Tom Tang said. "Many regional markets followed suit. So, it seems the trade issue is taking a backseat for the moment and bargain hunters have turned active to pick up stocks."
TSMC, the most heavily weighted stock on the local market, had risen 2.76 percent to NT$223.00 with 27.42 million shares changing hands as of 11:50 a.m. In the wake of a stronger TSMC, the bellwether electronics sector had gained 1.68 percent, and the semiconductor sub-index had added 1.85 percent.
Also in the high-tech sector, shares in iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, had added 0.87 percent to NT81.20, and Largan Precision Co., a smartphone camera lens supplier to Apple Inc., gained 6.08 percent at NT$4,885.00.
In the old economy sector, shares in Formosa Chemicals & Fibre Corp. had risen 2.21 percent to NT$115.50 and Formosa Plastics Corp. added 0.91 percent at NT$110.50.
"Judging from the strength of these market heavyweights, I suspect foreign institutional investors stood on the buy side after the recent sell-off," Tang said. According to Tang, foreign institutional investors have registered net sales of about NT$133.8 billion worth of shares on the main board over the past four weeks.
"Despite the current strong gains, I prefer to say that it is technical in nature since uncertainty over the Washington-Beijing trade dispute remains in place," Tang said. "Investors should continue to keep a close eye on that."
Meanwhile, HTC gained 0.39 percent to reach NT$51.90, after hitting a low of NT$50.40, while the company reported NT$2.23 billion in sales for June, down 67.64 percent from last year. The figure was also down 8.97 percent from the previous month.
It was the fifth consecutive month HTC has failed to generate monthly revenue of more than NT$3 billion.
Tang said since HTC is sitting on NT$66 per share in book value its share price is expected to receive some support to prevent the stock from plunging despite the latest poor sales report.
Source: Focus Taiwan News Channel