Shares in Taiwan closed higher Tuesday after recovering earlier losses due to late session buying amid eased concerns over the possibility of an immediate rate hike cycle by the U.S. Federal Reserve, dealers said.
Bargain hunters rushed to pick up large cap stocks, including contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), following the downgrade of Taiwan’s weighting in three major MSCI Inc. indexes, which went into effect after the market closed Tuesday, they said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 93.77 points, or 0.54 percent, at the day’s high of 17,490.29 after coming off a low of 17,207.57. Turnover totaled NT$335.3 billion (US$12.07 billion).
The market opened down 0.07 percent and selling continued to push the Taiex to the day’s low in the mid-morning session as investors unloaded their holdings before the cut in Taiwan’s weighting in the MSCI indexes took effect, dealers said.
However, buying followed and accelerated in the late session trading with market heavyweights in focus, led by TSMC, which rose almost 1.5 percent as bargain hunters took advantage of the stock’s earlier losses, which saw its share price fall below the NT$600.00 mark at one point, dealers added.
On Aug. 11, MSCI announced it would lower Taiwan’s weighting in three of its major indexes. The country’s weighting in the MSCI Emerging Markets Index, which is closely watched by foreign institutional investors, was lowered from 14.30 to 14.21 after a MSCI quarterly index review.
“While passive mutual funds had to adjust their portfolios based on MSCI’s latest cut of Taiwan’s weighting in its indexes, other funds remained upbeat about the Taiex’s outlook, in particular after the Fed chair struck a dovish tone in his monetary policy,” said Mega International Investment Services Corp. analyst Alex Huang.
In a speech made at the annual central banker symposium in Jackson Hole, Wyoming last week, Powell said while the Fed will reduce its asset purchases later this year, the timing and the pace of the downsizing of asset purchases “will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test.”
“Liquidity levels on the equity market remain high since there is no rush for foreign institutional investors to move their money back home after Powell’s remarks,” Huang said. “The buying in the late session to offset MSCI’s weighting downgrade showed many investors were bullish over the Taiex’s outlook.”
The last ditch buying during Tuesday’s session was so strong it boosted turnover by about NT$62.4 billion, according to the TWSE.
“Bargain hunters scrambled to buy into TSMC and other large cap stocks today. For TSMC, investors are happy that the chipmaker will benefit from a recent price hike at a time of a global supply shortages,” Huang said.
Shares in TSMC, the most heavily weighted stock on the local market, rose 1.49 percent to close at the day’s high of NT$614.00.
The company’s gains contributed about 76 points to the Taiex’s upturn and boosted the bellwether electronics sector and the semiconductor sub-index by 0.77 percent and 1.08 percent, respectively.
Among other tech stocks which were boosted by bargain hunting, contract notebook computer maker Quanta Computer Inc. added 1.16 percent to end at the day’s high of NT$78.40, iPhone assembler Hon Hai Precision Industry Co. rose 1.83 percent to close at the day’s high of NT$111.00, and PC brand Asustek Computer Inc. also ended at the day’s high of NT$324.00, up 1.57 percent.
Huang said late session buying was also seen among big non-tech stocks, giving an additional boost to the Taiex.
In the financial sector, which rose 0.28 percent, Fubon Financial Holding Co. rose 0.24 percent to close at NT$85.00 after recovering from a low of NT$83.60 in the morning session, when selling was sparked after the company priced a rights issue a day earlier to sell new shares at a discount of about 30 percent on Monday’s closing price. The funds will be used to acquire Jih Sun Financial Holding Co.
Cathay Financial Holding Co. rose 0.17 percent to end at NT$59.60 and Mega Financial Holding Co. gained 1.08 percent to finish at NT$32.80.
Among the old economy stocks which recouped earlier losses, Nan Ya Plastics Corp. gained 2.28 percent to close at NT$89.60, Taiwan Cement Corp. rose 1.79 percent to end at NT$48.45, and food brand Uni-President Enterprise Corp. added 0.98 percent to close at NT$72.30.
Bucking the upturn, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, lost 2.86 percent to end at NT$136.00, and Yang Ming Marine Transport Corp. fell 1.84 percent to close at NT$133.50.
“The Taiex ended above the 60-day moving average of around 17,340 points for the second straight session today, making the main board technically healthier and paving the way for more gains,” Huang said, adding that the nearest technical resistance could be seen ahead of 17,650, an intraday high on Aug. 5.
According to the TWSE, foreign institutional investors bought a net NT$24.26 billion worth of shares on the main board Tuesday.
Source: Focus Taiwan News Channel