TAIPEI — Shares in Taiwan on Tuesday staged a technical rebound from a dive in the previous session that was caused by concerns over a bank run in debt-ridden Cyprus, dealers said.
Financial stocks led the rebound after the sector was hammered by fears that the banking woes in Cyprus would trigger a domino effect in the eurozone.
The high-tech sector, meanwhile, posted gains on the back of select market heavyweights such as smartphone vendor HTC Corp., they said.
However, the upside was limited in thin trade as many investors preferred to stay on the sidelines, watching closely how the global financial markets, in particular Wall Street, will perform over the next few sessions, dealers added.
The weighted index closed up 27.13 points, or 0.34 percent, at 7,838.47, after moving between 7,823.81 and 7,863.77, on turnover of NT$71.91 billion (US$2.42 billion).
The market opened up 0.41 percent and rose to the day’s high as bargain hunters picked up financial and electronics heavyweights, dealers said.
As the index moved closer to the 7,900-point mark, profit taking set in, erasing part of the earlier gains by the end of the session amid cautious market sentiment toward the market outlook, they said.
“After yesterday’s plunge, many investors were reluctant to chase share prices, although the bourse rebounded soon after the market opened,” Mega International Investment Services Corp. analyst Alex Huang said.
“The (1.46 percent) dive in the previous session has weakened the market technically, so it is not easy for share prices to clear the stiff technical hurdles around 7,900 points at the moment,” Huang said.
Although many investors are willing to believe that the Cyprus financial difficulties are an isolated case in the eurozone, many others fear that further negative leads from other countries in the region will arise and thus affect market movements, he said.
“Under such unfavorable circumstances, when the market rebounded, investors rushed to pocket their gains,” Huang said. “I expect the market needs some time to consolidate before overcoming the technical resistance down the road.”
The financial sub-index closed up 0.74 percent on bargain hunting, lending support to the broader market. Cathay Financial Holding Co. gained 2.96 percent to end at NT$40.00, and E. Sun Financial Holding Co. rose 2.31 percent to close at NT$17.70.
In the high-tech sector, smartphone vendor HTC Corp. added 3.75 percent to end at NT$249.00 after it reported that pre-orders for its new flagship model — the HTC One — have topped sales of all of its predecessors in the Taiwan market.
MediaTek Inc. gained 0.44 percent to close at NT$340.00 and MStar Semiconductor Inc. rose 3.45 percent to NT$240.00 after fair trade authorities in South Korea approved a merger between the two Taiwanese integrated circuit designers.
Among the stocks in the Apple Inc. supply chain, Hon Hai Precision Industry Co., which assembles iPhones and iPads, gained 2.09 percent to end at NT$83.20, and metal casing supplier Foxconn Technology Co. added 2.62 percent to close at NT$82.30, after Apple shares rose 2.72 percent on Wall Street overnight.