Taiwan shares recoup earlier losses to end moderately higher

Taipei-Shares in Taiwan recovered earlier losses on a technical rebound to close slightly higher and top 10,600 points on Friday as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) bounced back from a slump in the previous session, dealers said.

The financial sector outperformed the broader market, attracting buying soon after the local equity market opened on hopes that a rate hike cycle in the U.S. market will help life insurers, who own plenty of assets overseas, boost their returns from overseas investments, they said.

The weighted index on the Taiwan Stock Exchange closed up 39.93 points, or 0.38 percent, at 10,600.37, after moving between 10,495.15 and 10,665.92, on turnover of NT$178.73 billion (US$5.96 billion).

The market opened up about 0.30 percent in the wake of a higher Wall Street, where the Dow Jones Industrial Average closed up 1.39 percent to hit a record high amid optimism at the potential passage of a tax reform bill on the U.S. Senate floor, dealers said.

At about 10 a.m., selling emerged to push down the bellwether electronics sector, led by smartphone camera lens supplier Largan Precision Co. (???), which fell below the NT$5,000 mark at one point, while the financial sector remained resilient, they said.

After choppy trading, with the weighted index falling below the 10,500 mark, bargain hunters started to pick up stocks, like TSMC, which suffered heavy losses in the previous session, and along with a stronger financial sector, TSMC’s upturn prompted the broader market to recover earlier losses and close above 10,600 points at the end of the session, they added.

“Today’s rebound was not strong at all compared with yesterday’s (1.43 percent) plunge,” Concord Securities analyst Kerry Huang said. “Investors remained cautious about when foreign institutional investors will resume buying after recent massive selling, which has hammered the high-tech sector.”

According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$7.85 billion worth of shares on Friday after net selling of NT$13.69 billion seen on Thursday.

Huang said TSMC’s gains helped the electronics sector and even the broader market respond to the fall seen a session earlier.

“However, the gains were technical in nature and it remains to be seen whether the stock will be able to jump over the nearest technical resistance at around NT$235.00 any time soon after a recent downgrade by a U.S. brokerage.”

TSMC, the most heavily weighted stock in the local market, which is believed to supply the A11 processor for the latest iPhone, rose 2.21 percent to close at NT$231.00 with 37.40 million shares changing hands.

Shares in Largan, another supplier to Apple Inc., continued their downward momentum from the previous session, falling 2.53 percent to end at NT$5,010.00 after bargain hunting led the stock to recover from a low of NT$4,740.00. Led by Largan, the optoelectronics sub-index ended down 1.80 percent.

Also in the electronics sector, Hon Hai Precision Industry Co., an assembler of iPhones and iPads, lost 0.90 percent to close at NT$99.10, and flat panel maker Innolux Corp. lost 1.15 percent to end at NT$12.95.

In addition to a higher TSMC, “another silver lining was a strong showing made by the financial sector on hopes that an imminent rate hike in the U.S. will boost Taiwanese life insurers’ overseas investments,” Huang said, referring to a policymaking meeting scheduled by the U.S. Federal Reserve for Dec. 12-13.

In the financial sector, which rose 1.98 percent, shares in Fubon Financial Holding Co., which owns Fubon Life Insurance, gained 3.77 percent to close at NT$50.90, and Cathay Financial Holding Co., which operates Cathay Life Insurance, added 5.03 percent to end at NT$54.30.

“Local investors should keep alert over the progress of the tax reform bill in the U.S. Congress, which is expected to continue to dictate Wall Street’s movement in the near future,” Huang said.

Source: Focus Taiwan News Channel