Local equities yesterday closed moderately lower after recovering most of their earlier losses on the back of bargain hunters, but investors remained concerned that the 2019 novel coronavirus outbreak could disrupt the production of Taiwanese manufacturers in China.
Bargain hunting focused on large-cap technology shares such as contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and iPhone assembler Hon Hai Precision Industry Co (鴻海精密), helping the broader market recoup its earlier losses, dealers said.
Government funds were rumored to be buying financial heavyweights in a bid to prevent the market from falling further, a move to comfort investors at a time of contagion, dealers added.
The TAIEX closed down 38.74 points, or 0.33 percent, at 11,574.07, on turnover of NT$130.789 billion (US$4.34 billion).
“It seems that there was strong technical support at about 11,400 points so some investors appeared willing to buy the dips for the moment, while worries over production disruption in China still weighed on market sentiment,” equity market analyst Andy Hsu (許博傑) said.
“I am worried that Hon Hai and other Taiwanese manufacturers in China will not have enough workers in the initial stage of production resumption due to the restrictions on people’s movement in many Chinese cities amid the virus scare,” Hsu said. “It is possible that only 30 to 40 percent of their production will be utilized in the initial phase.”
TSMC shares fell 0.15 percent to close at NT$327.5 in Taipei trading, coming off an earlier low of NT$321, while Hon Hai shares fell 1.09 percent to close at NT$82 after hitting a low of NT$78.9.
In the electronics sector, shares of Largan Precision Co (大立光), a supplier of smartphone camera lenses to Apple Inc, lost 0.11 percent to close at NT$4,750, while shares of flat-panel maker AU Optronics Corp (友達光電) rose 4.07 percent to close at NT$11.5 and those of local rival Innolux Corp (群創) gained 2.08 percent to NT$9.32 on hopes that buyers would shift orders from major Chinese manufacturers with production facilities in Wuhan.
Bargain hunters also focused on the financial sector, Hsu said.
“The buying of financial shares prompted me to conclude that government-led funds entered the market today in a bid to shore up confidence,” he said.
Mega Financial Holding Co (兆豐金控) shares rose 0.16 percent to close at NT$32.05 and Yuanta Financial Holding Co (元大金控) shares added 0.49 percent to NT$20.4, while those of CTCB Financial Holding Co (中信金控) were unchanged at NT$22.5.
“The TAIEX is expected to continue in consolidation mode amid Wuhan virus concerns and if there is any technical rebound, the nearest ceiling could be at about 11,700 points,” Hsu said.
Foreign institutional investors yesterday sold a net NT$4.54 billion of shares, Taiwan Stock Exchange data showed.
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