Local shares on Friday closed lower, but recouped a large part of their earlier losses on bargain hunting to return to 10,000 points, while investors remained wary of the COVID-19 pandemic, dealers said.
Bargain hunters turned active after the main board fell to less than 10,000 points and moved closer to 9,600 points, rushing to pick up battered large-cap tech stocks, in particular in the Apple Inc supply chain, while the petrochemical sector underperformed the broader market in the wake of falling international crude oil prices, the dealers said.
The TAIEX on Friday ended down 293.45 points, or 2.82 percent, at 10,128.87, after moving between 9,636.15 and 10,171.20 on turnover of NT$302.182 billion (US$10 billion). That was a 10.5 percent plunge from a close of 11,321.81 on March 6.
The market opened down 3.17 percent in a knee-jerk reaction to heavy losses on US markets, the dealers said.
Thursday’s plunge of the US markets came after the WHO declared COVID-19 a pandemic as the number of confirmed cases worldwide continued to rise.
The weakness on the local main board continued to push down the TAIEX to the day’s low, which was closer to 9,600 points, prompting some investors to shift to the buy side, in particular in the late trading session, to take advantage of the relatively low valuations after the earlier sell-off, which helped the main board return to 10,000 points by the end of the session, the dealers said.
“The late-session interest showed that many investors had a consensus that a buying opportunity on the battered local main board has emerged and their participation boosted today’s turnover to top the huge NT$300 billion level,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang (黃國偉) said.
“I think among the active bargain hunters were government-led funds in a bid to limit the downturn and eventually bolster investor confidence in the local equity market for the moment,” Huang said.
Bargain hunting focused on large-cap Apple concept stocks, lifting the entire electronics sector, which dominated the main board throughout the trading session, he said.
“The contagion is likely to hurt consumption for now, but after the virus spread slows down, the tech industry could benefit from deferred purchases,” Huang said.
Among the suppliers to Apple, contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the most heavily weighted stock on the local market, rose 1.36 percent to close at NT$290 after coming off a low of NT$272.50, with 149.74 million shares changing hands.
After hitting a low of NT$69.90, iPhone assembler Hon Hai Precision Industry Co Ltd (鴻海精密), second only to TSMC in terms of market capitalization, lost 0.13 percent to close at NT$74.60, while smartphone camera maker Largan Precision Co (大立光) gained 2.01 percent to end at NT$4,060 after coming off a low of NT$3,620 and contract notebook computer producer Quanta Computer Inc (廣達電腦) closed up 3.06 percent at NT$60.60, off a low of NT$54.50.
Riding the wave of bargain hunting, the electronics sector ended at 447.45, down 1.96 percent, off a low of 423.12.
The hard-hit financial sector also got a boost from bargain hunting to recover some of its earlier losses, with Yuanta Financial Holding Co (元大金控) down 0.57 percent to close at NT$17.40, off a low of NT$16, and Mega Financial Holding Co (兆豐金控) down 0.66 percent to end at NT$30 after hitting a low of NT$28.05.
The petrochemical sector underperformed the broader market amid concern over a plunge in crude oil prices, the dealers said.
Formosa Petrochemical Corp (台塑石化) fell 5.45 percent to close at NT$72.90, Formosa Plastics Corp (台灣塑膠) lost 4.05 percent to end at NT$80.60, Nan Ya Plastics Corp (南亞塑膠) dropped 3.76 percent to close at NT$61.40 and Formosa Chemicals & Fibre Corp (台灣化纖) lost 3.73 percent to end at NT$72.30.
“Despite the latest bargain hunting, the local equity market is still dictated by the performance of the global markets, as the virus spreading in the US and Europe shows no signs of easing,” Huang said.
“If there is any technical rebound, the TAIEX could see stiff technical resistance ahead of 10,300 points,” he said.
Foreign institutional investors on Friday sold a net NT$30.23 billion of shares on the main board after a net sale of NT$36.82 billion a session earlier, Taiwan Stock Exchange data showed.
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