Taiwan shares recoup earlier losses on low turnover

Shares in Taiwan recouped earlier losses to close higher on Tuesday, the first trading session of 2023, but turnover remained slight amid worries over a possible global recession this year, dealers said.

The bellwether electronics sector led the rebound as buyers focused on large semiconductor stocks, while old economy stocks in the new energy development also attracted buying on the back of the government's efforts to push renewable power development, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up by 86.43 points, or 0.61 percent, at 14,224.12 after moving between 14,001.97 and 14,237.94. Turnover totaled NT$149.33 billion (US$4.86 billion).

The market opened down by 0.21 percent and reached the day's low in the early morning session as selling occurred, especially in the electronics sector.

The fall came following a 0.22-percent fall on the Dow Jones Industrial Average and a 0.11-percent fall on the tech-heavy Nasdaq index on Friday, the last trading session of 2022, as market sentiment was haunted by fears over a recession, dealers said.

TSMC

But, with the Taiex moving closer to the nearest technical support at around 14,000, bargain hunters became active and rushed to pick up semiconductor heavyweights, in particular contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and select IC designers, to push up the main board to positive territory by the end of the session, dealers said.

"Judging from the buying in TSMC and other major tech stocks, I think government-led funds were behind today's buying," Hua Nan Securities analyst Kevin Su said.

"Such a low turnover made it easy for these funds to boost the Taiex to positive territory and shore up investors' confidence as worries over a recession created volatility in the global markets at a time of an aggressive rate hike cycle by the major central banks in the world."

"TSMC played a crucial role after making a comeback amid bargain hunting. The stock, again, dominated the trading session today, on the back of its large weighting," Su said.

After coming off the day's low of NT$443.00, TSMC, the most heavily weighted stock in the local market, rose by 1.00 percent to close at the day's high of NT$453.00.

TSMC's gains contributed about 40 points to the Taiex's rise and boosted the electronics sector by 1.06 percent to end 650.32, off a low of 637.89. The semiconductor sub-index also rose by 1.44 percent to close at 304.64, off a low of 297.40.

Other tech stocks

United Microelectronics Corp. (UMC), a smaller contract chipmaker, rose by 1.72 percent to close at NT$41.40, off a low of NT$40.25.

IC designers benefited from bargain-hunting with smartphone IC designer MediaTek Inc. rising by 3.04 percent to close at NT$644.00, and Novatek Microelectronics Corp., a UMC display driver IC design subsidiary, soaring by 6.02 percent to end at NT$344.50.

"A fall in mature IC prices from contract chipmakers is good for these IC designers," said Su.

Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. bucked the upturn, falling by 0.80 percent to close at NT$99.10, while flat panel maker AU Optronics Corp. and rival Innolux Corp. rose by 3.00 percent and 1.36 percent, respectively, to end at NT$15.45 and NT$11.20.

Renewable energy developers

"Select renewable energy developers attracted rotational buying after the Legislative Yuan just approved a special bill for infrastructure and other economic development projects," Su said, referring to a special budget bill which was passed on Dec. 30 to authorize the central government to spend up to NT$209 billion on infrastructure and other development projects in 2023 and 2024.

Amid optimism in offshore wind power development in Taiwan, suppliers such as Century Iron and Steel Industrial Co. and Ta Ya Electric Wire & Cable Co. got a boost Tuesday, rising by 2.71 percent and 2.60 percent, respectively, to close at NT$20.85 and NT$90.90.

In addition, Chung Hung Steel Corp. increased by 1.31 percent to end at NT$27.10.

Other old economy stocks appeared mixed. Textile brand Far Eastern New Century Corp. dipped by 0.63 percent to close at NT$31.70, and Eclat Textile Co. fell by 2.42 percent to end at NT$483.50, while Nan Ya Plastics Corp. increased by 1.27 percent to close at NT$71.90, and Formosa Plastics Corp. edged up by 0.23 percent to end at NT$87.00.

In the financial sector, which rose by 0.05 percent, Fubon Financial Holding Co. edged up by 0.18 percent to close at NT$56.40, while Cathay Financial Holding Co. dipped by 0.12 percent to end at NT$39.95.

Despite the gains in the Taiex, foreign institutional investors sold a net NT$101.25 million worth of shares on the main board Tuesday, according to the TWSE.

Source: Focus Taiwan News Channel