TAIPEI (CNA) — Shares in Taiwan rebounded slightly Friday after plunging a session earlier, but market sentiment was still hurt by uncertainty over the spreading coronavirus epidemic, dealers said.
The electronics sector drove the rebound, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), but the upturn was capped ahead of strong technical resistance at the 60-day moving average of around 11,700 points, they said.
The weighted index on the Taiwan Stock Exchange (TWSE), the Taiex, ended up 73.36 points, or 0.64 percent, at 11,495.10, after moving between 11,436.95 and 11,594.21. Turnover was NT$175.28 billion (US$5.8 billion).
The market opened up 0.64 percent on rebounds in U.S. markets overnight, including a 0.4 percent rise in the Dow Jones Industrial Average, dealers said.
Buying then continued as bargain hunters got on board, taking advantage of the market’s 5.75 percent dive Thursday amid rising concerns over the spread of the coronavirus.
But as the Taiex rose to the day’s high, some investors shifted to the sell side to limit the gains by the end of the session, dealers added.
“The Wuhan virus is new and few can be sure how bad its spread will be, and such uncertainty is the last thing investors want,” Mega International Investment Services Corp. analyst Alex Huang said.
“So after yesterday’s steep fall, today’s rebound failed to attract many investors to chase prices, which limited the upturn,” Huang said.
“Many investors simply fear that the uncertainty posed by the new virus will cause markets at home and abroad to fall further down the road.”
For the Taiex, Huang said, the next strong technical support is expected at around the 120-day moving average of 11,275 points, meaning there is room for the market to fall and absorb downward pressure.
Huang said Friday’s rebound largely came from bargain hunting, focusing on the large cap tech stocks that came under pressure Thursday to push the market almost 700 points lower, the largest drop in Taiwan’s stock market history.
Among the rebounding big tech stocks, TSMC, the most heavily weighted stock in the local market, rose 1.11 percent to close at NT$320.00, with 62.24 million shares changing hands. TSMC plunged 4.95 percent Thursday.
TSMC alone contributed an increase of about 30 points to the Taiex and boosted the electronics sector and the semiconductor sub-index by 0.77 percent and 0.99 percent, respectively.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market capitalization, rose 0.12 percent to end at NT$83.20, and Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., gained 2.02 percent to close at NT$4,805.00.
Bargain hunters also picked up old economy stocks. Among them, Formosa Plastics Corp. rose 1.97 percent to close at NT$93.40, and Nan Ya Plastics Corp. gained 1.60 percent to end at NT$69.70.
Food brand Uni-President Enterprises Corp. rose 0.83 percent to close at NT$72.60, and Asia Cement Corp. added 0.56 percent to end at NT$45.15.
In the financial sector, which closed up 0.45 percent, Mega Financial Holding Co. rose 1.12 percent to close at NT$31.55, and Yuanta Financial Holding Co. gained 1.81 percent to end at NT$19.70.
“It’s possible that some of the buying came from government-led funds as the government wanted to see the market stabilize after yesterday’s dive,” Huang said.
Despite the technical rebound, foreign institutional investors sold a net NT$17.20 billion in shares after a net sell of NT$18.10 billion a session earlier, according to the TWSE.