Shares in Taiwan staged a mild technical comeback Wednesday from the slump a session earlier, although turnover remained moderate with many investors preferring to stay on the sidelines amid lingering concerns over the global economic slowdown to cap the upturn, dealers said.
Buying largely focused on old economy industries, while the bellwether electronics sector saw its gains limited by worries over the on-going inventory adjustments in the global tech industry, dealers added.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 64.37 points, or 0.45 percent, at 14,234.40 after moving between 14,197.86 and 14,291.98. Turnover totaled NT$218.82 billion (US$7.13 billion).
The market opened up 0.25 percent, rebounding from a 1.82 percent drop on Tuesday, when market sentiment was badly hurt following a surprise move by the Bank of Japan (BOJ) to tighten monetary policy. Buying on the main board increased with large cap old economy stocks, in particular in the steel and transportation industries, in focus before some investors shifted to the sell side, reducing earlier gains by the end of the session, dealers said.
"While many foreign institutional investors have been absent from the trading floor, local investors appeared reluctant to chase prices for the moment despite the main board's initial gains," Hua Nan Securities analyst Kevin Su said. "It was no surprise that the Taiex failed to overcome technical resistance ahead of the 120-day moving average of 14,312 points."
Buying mainly rotated to large old economy stocks, while the electronics sector was relatively quiet as investors remained afraid of weakening global demand for tech gadgets at a time when the major central banks in the world have been gearing up to raise interest rates to combat inflation, Su said.
Old economy stocks
On expectations that the steel industry will recover in the first half of next year, the steel index rose 4.27 percent with Yieh Hsing Enterprise Co. soaring 10 percent, the maximum daily increase, to close at NT$11.90, and Chung Hung Steel Corp. surging 9.72 percent to end at NT$27.10. In addition, shares in China Steel Corp., the largest steel maker in Taiwan, rose 4.39 percent to close at NT$29.70 and Tung Ho Steel Enterprise Corp. added 2.41 percent to end at NT$51.00.
The transportation sector also attracted solid rotational buying, rising 2.79 percent. In the sector, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, rose 3.47 percent to close at NT$164.00, and rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. gained 2.82 percent and 4.04 percent, respectively, to end at NT$65.70 and NT$79.80.
Rebounding from a 2.03 percent fall on Tuesday, the textile sector rose 1.91 percent. Among the rising textile stocks, Eclat Textile Co. gained 5.82 percent to close at NT$472.50, and rival Makalot Industrial Co. rose 3.90 percent to end at NT$240.00.
Tech stocks
Underperforming the broader market and the old economy sector, the electronics sector rose only 0.21 percent with the semiconductor sub-index up 0.34 percent.
"A spike in COVID-19 infections in China is creating uncertainty over the global economy, which is expected to send demand even lower," Su said. "There are growing fears that inventory adjustments in the world's semiconductor industry will continue into the third quarter of next year, instead of the second quarter the market had previously expected," Su said.
"I have to repeat that rising interest rates have made many tech stocks less attractive and that's why the willingness to chase prices in the tech sector was low today," Su added.
Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, rose 0.33 percent to close at NT$459.00, United Microelectronics Corp., a smaller contract chipmaker, added 0.36 percent to end at NT$42.00, smartphone IC designer MediaTek Inc. gained 1.24 percent to close at NT$654.00, and IC packaging and testing services provider ASE Technology Holding Co. ended up 1.93 percent to end at NT$95.30.
Bucking the upturn, application specific integrated circuit (ASIC) designer Alchip Technologies Ltd. shed 1.70 percent to close at NT$809.00, and power management IC designer Silergy Corp. lost 1.87 percent to end at NT$445.00.
Financial sector
In the financial sector, which lost 0.22 percent, Cathay Financial Holding Co. fell 0.37 percent to close at NT$40.00, while Fubon Financial Holding Co. ended unchanged at NT$56.20.
"It is possible that the local equity market will see conglomerates buying their own shares to dress up their books as the year end approaches," Su said. "But, I expect there is little room for the Taiex to go up, with stiff technical resistance ahead of the 10-day moving average at around 14,500 points."
According to the TWSE, foreign institutional investors bought a net NT$513 million worth of shares on the main board Wednesday.
Source: Focus Taiwan News Channel