Taiwan shares rebound on bargain hunting


TAIPEI — Share prices in Taiwan recouped early losses Wednesday after bargain hunters emerged in late trading, but sentiment remained cautious about the global economy, preventing the market from making further gains, dealers said.

Many investors preferred to stay on the sidelines amid concerns over the debt crisis in Europe. Turnover remained low as fears ran deeper that the European financial crisis would continue to drag down the world’s economic fundamentals, they said.

The weighted index closed up 26.26 points, or 0.38 percent, at 6,922.57, after moving between 6,860.39 and 6,926.09, on turnover of NT$61.21 billion (US$2.02 billion).

The market opened 0.55 points lower and moved to the day’s low on a knee-jerk reaction to Wall Street’s overnight fall, which resulted from a warning from the U.S. Federal Reserve that the global financial crisis continued to pose downside risks for the economy, dealers said.

Investors were also disappointed with the Fed’s failure to meet their expectations that it would adopt another round of quantitative easing to boost the economy.

However, bargain hunters turned active afterwards and picked up small and medium cap stocks, in particular companies in the LED sector that have been hit hard by earnings uncertainty, they said.

“But the gains of these small and medium cap stocks were not strong enough to push the index much higher, while many market heavyweights remained sluggish as many investors again stayed on the sidelines,” Hua Nan Securities analyst Stan Chang said.

“With the market outlook overshadowed by weakening global demand, I expect the latest buying was just for trading purposes,” Chang said.

In the LED sector, Everlight Electronics, Edison Opto and Unity Opto all rose by the maximum permissible daily increase of 7 percent to close at NT$51.10, NT$52.60 and NT$22.45, respectively.

Among market heavyweights, however, Taiwan Semiconductor Manufacturing Co. fell 0.93 percent to end at NT$74.50 and food maker Uni-President Enterprises shed 2.31 percent to NT$42.25.

Chang said that with many foreign institutional investors off for the upcoming Christmas holiday, the local bourse is likely to remain quiet, with daily trading volume expected to range between NT$50 billion and NT$60 billion in the near future.

The construction sector scored the biggest gains among the largest eight sectors on the market, finishing up 1 percent. Textile shares rose 0.8 percent, paper and pulp stocks added 0.7 percent, plastics and chemical shares gained 0.6 percent, and machinery and electronic stocks closed up 0.4 percent.

Financials rose 0.3 percent, while cement stocks fell 0.3 percent and food shares closed down 0.8 percent.