Taipei, March 27 (CNA) Shares in Taiwan staged a technical rebound on Wednesday as buying rotated to nontech stocks in a catch-up play with the bellwether electronics sector.
Despite the gains, turnover shrank, indicating many investors remained wary of a major pullback after the main board scored solid gains in recent sessions to stand above the 20,000-point mark.
The Taiex, the Taiwan Stock Exchange’s (TWSE) weighted index, ended up 73.63 points, or 0.37 percent, to end at 20,200.12 after moving between 20,108.96 and 20,255.10. Turnover totaled NT$385.63 billion (US$12.05 billion), down from NT$493.91 billion recorded a session earlier. On Tuesday, the main board fell 0.33 percent.
The market opened up 0.15 percent in a seesaw movement with buying largely in the old economy sector to offset the weakness among select tech heavyweights, including contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC).
Such narrow fluctuations continued into the end of the session as many investors preferred to stay on the sidelines for the moment, sending turnover lower.
“Look at the lackluster US markets, in particular among large-cap tech stocks overnight. It was no surprise that many electronics stocks continued to trade in the doldrums,” Concord Capital Management analyst Lu Chin-wei said, referencing a 0.42 percent decline on the tech-heavy Nasdaq index and a 0.28 percent fall on the Philadelphia Semiconductor Index on Tuesday.
“The silver lining was that rotational buying remained active as investors rushed to park their funds in the old economy sector, which had lagged behind its tech counterpart,” Lu said.
Lu singled out the construction industry, which rose 2.18 percent, saying housing prices have been pushed up at a time when many companies have been keen to invest, prompting their employees to buy homes.
“For example, TSMC’s investments in Taiwan have created business opportunities for property developers,” Lu said, referring to the chipmaker’s projects to build advanced wafer fabs and high-end IC packaging plants in southern Taiwan.
Among the winning property stocks, King’s Town Construction Co. rose 6.28 percent to close at NT$44.00, Crowell Development Corp. surged 5.08 percent to end at NT$46.55, Kindom Development Co. added 3.90 percent to close at NT$41.30, and Cathay Real Estate Development Co. ended up 2.36 percent at NT$21.65.
Lu said “national defense concept” stocks were also bolstered by rotational buying as the government has intensified efforts to build the local national defense industry, with unmanned aerial vehicle (UAV) developer Thunder Tiger Corp. jumping 10 percent, the maximum daily increase, to close at NT$64.20, and aircraft maintenance services provider Air Asia Co. rising 7.14 percent to end at NT$37.50.
In the transportation industry, which rose 1.71 percent, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, rose 2.33 percent to close at NT$175.50, while rival Yang Ming Marine Transport Corp. ended unchanged at NT$44.15.
China Airlines rose 2.36 percent to close at NT$19.55, and EVA Airways gained 2.42 percent to end at NT$31.70.
Lu said the semiconductor industry, which ended down 0.17 percent, lost its luster, as TSMC fell 0.38 percent to close at NT$779.00.
“The stock seemed to see some technical resistance ahead of NT$780.00. But, its fundamentals remain sound so I expect the room for its share price to move lower will be limited,” Lu said.
TSMC’s selling spread to other semiconductor stocks with IC packaging and testing services provider ASE Technology Holding Co. down 1.91 percent to close at NT$154.00, and United Microelectronics Corp., a smaller contract chipmaker, down 0.39 percent to end at NT$51.50.
“Fortunately, Hon Hai and MediaTek outperformed the tech sector by attracting many bargain hunters, which prevented the electronics sector from heading south,” Lu said. The electronics index rose 0.31 percent.
iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, gained 4.58 percent to close at NT$148.50 as “many investors have embraced high hopes about its efforts in developing AI servers,” Lu said.
After consolidating in recent sessions, smartphone IC designer MediaTek Inc., No. 3 in market capitalization, rose 3.10 percent to end at NT$1,165.00.
“Concerns over a possible correction after recent solid gains have dampened investors’ willingness to chase prices, sending turnover lower,” Lu said. “If such a mentality continues, I am afraid that more and more investors will lose patience and it is possible the Taiex will test 20,000 points.”
According to the TWSE, foreign institutional investors sold a net NT$6.89 billion worth of shares on the main board Wednesday.
(By Lai Yen-hsi and Frances Huang)
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