Taiwan shares bounce back by over 5%

(CNA)

TAIPEI (CNA) — Taiwan shares staged a strong rebound Tuesday morning after slumping a day earlier on gains posted by U.S. market futures, pointing to potential gains in U.S. markets Tuesday, dealers said.

Market sentiment was boosted by the U.S. Federal Reserve’s announcement overnight of an unlimited bond purchase program to keep the world’s largest economy from plunging into a recession, dealers said.

As of 10:18 a.m., the benchmark weighted index on the Taiwan Stock Exchange (TWSE), the Taiex, had risen 488.06 points, or 5.49 percent, to 9,378.09 on turnover of NT$74.47 billion (US$2.46 billion).

After falling 3.73 percent a day earlier, the market opened up 2.18 percent and maintained its upward momentum, buoyed by gains in other regional markets, including in Seoul and Tokyo.

Regional markets were encouraged by a rise in Dow Jones Industrial Average futures, which were up 4.8 percent at one point, dealers said.

“The current buying helped the Taiex return to its 10-year moving average of about 9,100 points, a good sign technically for the market,” Hua Nan Securities analyst Kevin Su said.

“I think government-led funds and even the National Stabilization Fund are among the bargain hunters, taking advantage of the improved investor mood to add ammunition to the Taiex,” Su said, referring to the Fed’s quantitative easing plan and also a potential fiscal stimulus bill to be passed by the U.S. Senate.

Taiwan has also taken measures to prop up its market, including the activation of a NT$500 billion stabilization fund and a ban on shorting any stocks that end down more than 3.5 percent in the previous trading session, Su said.

“The measures are working to stabilize the market,” Su said.

Among the rebounding tech heavyweights, chipmaker TSMC, the most heavily weighted stock in the local market, had risen 6.47 percent to NT$271.50 as of 10:18 a.m.

Led by TSMC, the electronics sector and the semiconductor sub-index were up 5.95 percent and 6.64 percent, respectively.

Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market capitalization, had gained 4.30 percent to NT$70.40, and Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., had added 8.41 percent to NT$3,740.00.

Integrated circuit designer MeidaTek Inc. was up 8.93 percent at NT$335.50 due to a share buyback program that started from Monday and will run through May 22.

“The local market has stopped heading south, and the next step is for it to consolidate, paving the path for an upswing. But how it will go depends on the performance of global markets,” Su said.

“In addition to the COVID-19 spread, investors should pay close attention to the global energy market. If international crude oil prices continue to fall, global stocks are expected to get hurt,” Su said.

In the petrochemical sector, which is highly correlated to crude oil prices, Nan Ya Plastics Corp. had risen 7.71 percent to NT$52.40 as of 10:18 a.m., Formosa Petrochemical Corp. had added 7.67 percent to NT$77.20, Formosa Chemicals & Fibre Corp. had risen 6.29 percent to NT$65.90, and Formosa Plastics Corp. had gained 6.00 percent to NT$70.70.