Local shares on Friday rebounded slightly after plunging a session earlier, but market sentiment was still hurt by uncertainty over a spreading coronavirus epidemic, dealers said.
The electronics sector drove the rebound, led by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), but the upturn was capped ahead of strong technical resistance at the 60-day moving average of about 11,700 points, they said.
The TAIEX on Friday ended up 73.36 points, or 0.64 percent, at 11,495.10, plunging 5.1 percent from a close of 12,118.71 on Jan. 20, the last day of trading before the Lunar New Year holiday. The index moved between 11,436.95 and 11,594.21, with turnover totaling NT$175.28 billion (US$5.79 billion).
The market opened up 0.64 percent on overnight rebounds in US markets, including a 0.4 percent rise in the Dow Jones Industrial Average, the dealers said.
Buying then continued as bargain hunters got on board, taking advantage of the market’s 5.75 percent dive on Thursday amid rising concerns over the spread of the coronavirus.
However, 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, the dealers said.
“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 (兆豐國際投顧) analyst Alex Huang (黃國偉) said.
“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,” Huang added.
The next strong technical support is expected at about 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 came largely from bargain hunting, focusing on large-cap tech stocks that were under pressure on Thursday to push the market almost 700 points lower, the largest drop in Taiwan Stock Exchange 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, with 62.24 million shares changing hands. TSMC plunged 4.95 percent on Thursday.
TSMC alone on Friday contributed an increase of about 30 points to the TAIEX and boosted the electronics sector and the semiconductor subindex by 0.77 percent and 0.99 percent respectively.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co (鴻海精密), second to TSMC in terms of market capitalization, rose 0.12 percent to end at NT$83.20 and Largan Precision Co (大立光), a supplier of smartphone camera lenses to Apple Inc, gained 2.02 percent to close at NT$4,805.
Bargain hunters also picked up old economy stocks. Among them, Formosa Plastics Corp (台灣塑膠) rose 1.97 percent to close at NT$93.40 and Nan Ya Plastics Corp (南亞塑膠) gained 1.6 percent to end at NT$69.70.
Food and beverage conglomerate Uni-President Enterprises Corp (統一企業) rose 0.83 percent to close at NT$72.60 and Asia Cement Corp (亞洲水泥) added 0.56 percent to end at NT$45.15.
In the financial sector, which closed up 0.45 percent, Mega Financial Holding Co (兆豐金控) rose 1.12 percent to close at NT$31.55 and Yuanta Financial Holding Co (元大金控) 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, Taiwan Stock Exchange data showed.
Elsewhere in Asia on Friday, markets struggled to find their footing after the WHO declared a global health emergency over the deadly virus.
After saying last week that it needed more information, the WHO invoked the rarely used designation, which experts hope will lead to better international coordination to combat a disease that has already killed at least 200 people and sickened thousands more.
Yet, the Geneva, Switzerland-based body stopped short of recommending trade and travel restrictions that could have had a bruising effect on China — a key growth engine for the world economy.
A large swathe of central China has been locked down, effectively quarantining millions of people in their cities and halting travel around the country.
“We must all act together now to limit further spread... We can only stop it together,” said WHO Director-General Tedros Adhanom Ghebreyesus, who traveled to China earlier this week and met with Chinese President Xi Jinping (習近平).
Foreign airlines — including British Airways and Deutsche Lufthansa AG — have begun canceling or curtailing flights to and from China, and a number of governments have recommended that their citizens avoid visiting the country.
However, Tedros said that there was “no reason” for any of the international travel or trade restrictions announced in the past several days.
Investors initially applauded the WHO’s move, plunging back into markets that have lost altitude over the past week as the crisis has worsened.
“Sure the WHO raised the alert, but they didn’t ring the apocalypse bell, so it could be time for risk-takers to come out of hibernation,” AxiCorp chief market strategist Stephen Innes said.
The WHO move “eased some mushrooming fears by suggesting the number of outbreaks is relatively small,” he said.
Tokyo welcomed the news, with the Nikkei 225 on Friday closing up 227.43 points, or 1 percent, at 23,205.18, a drop of 2.6 percent from 23,827.18 on Jan. 24.
Sydney added just more than 0.1 percent.
However, Hong Kong dithered. After opening up on the news, the Hang Seng on Friday steadily lost its way to finish down 136.50 points, or 0.5 percent, at 26,312.63, plunging 5.9 percent from a close of 27,949.64 a week earlier.
Jakarta and Manila fared worse — down 1.9 percent and 2.6 percent respectively.
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