TAIPEI — Shares in Taiwan staged a rebound yesterday to end above the 7,900-point level as investors took cues from a rising Wall Street overnight and comebacks in other regional markets, dealers said.
Bargain hunters took advantage of the market’s 1.22-percent dive on Monday by buying into financial and high-tech stocks, helping the broader market overcome technical hurdles ahead of 7,900 points, they said.
The weighted index closed up 65.37 points, or 0.83 percent, at 7,932.71, after moving between 7,882.56 and 7,939.85, on turnover of NT$91.88 billion. The market opened up 0.54 percent after the Dow Jones Industrial Average closed overnight near its all-time high as investors remained bullish despite US$85 billion in automatic spending cuts that will soon hit the United States economy, dealers said. The gains posted by other regional markets yesterday morning, including in Tokyo and Shanghai, led more investors to return to the local trading floor and pick up leading financial and electronics shares, they said.
“Markets at home and abroad widely expect that the White House and the U.S. Congress will soon come up with alternative measures to deal with the budget cuts and prevent them from taking a big bite out of the economy,” Mega International Investment Service Corp. analyst Alex Huang said.
“On the back of a rebound on Wall Street overnight, many investors were more willing to buy today, in particular in the financial sector,” Huang said. The financial sector closed up 1.66 percent after it was hammered a day earlier by the Ministry of Finance’s announcement that it would review the auditing processes of Taiwan’s state-invested securities and investment firms. The announcement came after news of possible corruption at such institutions. “The financial sector was oversold Monday on the psychological impact of the MOF’s announcement,” Huang said. “After investors turned calmer yesterday, they started to place their bets on the sector, which is expected to benefit from increasing cross strait financial exchanges. “I favor financial stocks because of their relatively low valuations,” he said.
Cathay Financial Holding Co. gained 3.7 percent to close at NT$39.20, and Fubon Financial Holding Co. added 1.77 percent to end at NT$40.35. Also benefiting from a technical rebound, the electronics sector closed up 1.03 percent, but Huang cautioned investors to remain alert to the possibility of a pullback because the sector is still in its slow season.
Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chip maker, gained 1.96 percent to close at NT$104.00, while touch panel supplier TPK Holding Co. rose by the maximum daily increase of 7 percent to end at NT$604.00. Huang said that because technical resistance ahead of 8,000 points remains stiff, the local bourse is expected to move between 7,800 and 8,000 points in the near term.