TAIEX benefits from bargain hunting amid looming caution
CNATAIPEI--Shares in Taiwan recouped earlier losses Wednesday on the back of bargain hunting, with the main focus on large-cap stocks such as Taiwan Semiconductor Manufacturing Co. (TSMC) and smartphone camera lens supplier Largan Precision Co., dealers said.
August 29, 2013, 12:22 am TWN
However, market sentiment remained cautious amid tensions in the Middle East as many investors feared that a possible U.S. military strike on Syria will spike international crude oil prices and hurt the global economy, the dealers said.
The weighted index closed up 3.70 points, or 0.04 percent, at 7,824.54, after moving between 7,761.76 and 7,834.11, on turnover of NT$62.30 billion (US$2.08 billion).
The market opened down 0.56 percent and fell to the day's low as investors took cues from a plunge on Wall Street overnight and losses posted by regional markets, such as Tokyo and Seoul, in reflection of escalating tension in the Middle East, the dealers said.
However, bargain hunters then turned active to pick up large-cap stocks, in particular in the bellwether electronics sector, helping the broader market recover its earlier losses by the end of the session, they said.
“Investors appeared willing to buy after the index fell below 7,800 points during the session,” Mega International Investment Service Corp. analyst Alex Huang said. “It seems that the market has strong technical resistance around that level for the moment.”
Among the gaining market heavyweights, TSMC, the most heavily weighted stock in the local market, gained 1.26 percent to close at NT$96.80, off an early low of NT$95.10, while Largan added 2.32 percent to return to the NT$1,000 mark and end at NT$1,015, off an early low of NT$985.00.
In the old economy sector, food product maker Uni-President Enterprises Corp. gained 1.52 percent to close at NT$53.70, while textile supplier Far Eastern New Century Corp. rose 0.16 percent to end at NT$31.20.
“Judging from the buying in these large-cap stocks, I suspect that the government-led funds stood on the buy side in a bid to boost market confidence at a time when external factors could impact the market,” Huang said, referring to a likely attack by the U.S. on Syria.
Huang said that if tension in the Middle East escalates, international crude oil prices will rise accordingly, affecting the global economy. Oil prices in New York and in London rose 2.9 percent and 2.4 percent overnight, respectively, under the unfavorable circumstances.
In addition, concerns over a possible early exit by the U.S. Federal Reserve from its monthly US$85 billion bond-buying program still kept many investors from chasing prices to cap the gains in share prices, Huang said.
“It was no surprise that the TAIEX remained in consolidation mode. It could face stiff technical resistance at around 8,050 points even if the rebound continues,” Huang said.
Integrated circuit designer MStar Semiconductor Inc. rose 7 percent, the maximum daily increase, to close at NT$263.00 after China issued a greenlight on a merger plan between the company and MediaTek Inc.
MediaTek, however, fell 0.41 percent to end at NT$366.00, off an early high of NT$373.00, due to profit-taking.