Shares in Taiwan yesterday staged a solid technical rebound, surging more than 360 points as investors rushed to take advantage of a recent slump and pick up bargains, dealers said.
Buying focused on large-cap tech stocks, while financial and old economy heavyweights also rode the rebound, lending support to the broader market, dealers said.
The TAIEX closed up 361.06 points, or 2.35 percent, at the day’s high of 15,728.64. Turnover totaled NT$238.998 billion (US$8.04 billion), with foreign institutional investors buying a net NT$18.17 billion of shares on the main board, Taiwan Stock Exchange data showed.
The bellwether electronics sector, which anchored the TAIEX’s rebound, rose 2.22 percent, while the semiconductor subindex gained 1.84 percent.
“The recent selling on the local main board seems to have overshot the mark, prompting investors to pick up bargains soon after the market opened,” More Rich Securities Investment Consulting (摩爾投顧) analyst Adam Lin (林漢偉) said, referring to a decline of about 1,300 points (7.82 percent) that the TAIEX posted over the previous eight trading sessions, amid concerns about aggressive interest rate increases by the US Federal Reserve.
“With the second quarter coming to an end soon, some mutual funds are also dressing up their books for the quarter by raising their holdings to boost share prices,” Lin said. “In addition to tech stocks, financial and old economy stocks have become targets.”
The financial sector rose 3.4 percent amid hopes that a widening interest spread would boost banks’ bottom lines.
“It remains to be seen whether the main board will challenge the high technical hurdles around 16,000 points soon,” Lin said. “The TAIEX’s strength will depend on how the US markets will rebound down the road.”
In related news, Goldman Sachs Group Inc said that Taiwan-China tensions have risen to the highest in the past decade, but are now largely priced into Taiwan’s equities, based on two new indicators it has created.
The Cross-Strait Risk Index, which tracks news articles on geopolitical tensions, jumped after Russia’s invasion of Ukraine in February and the inverse correlation with broader Taiwan equities rose to the highest level in its time series, strategists, including Alvin So (蘇瑋忠) in Hong Kong and Timothy Moe (慕天輝) in Singapore, wrote in a note to clients.
“This suggests that the broader Taiwan market has started to price in cross-strait risk for the first time over the past decade,” they said.
Goldman also created a second indicator, the Cross-Strait Risk Barometer, to measure market-implied risks based on variables such as Taiwan’s tech exporters with exposure to China, as well as tourism stocks.
The analysts said the two gauges have spiked in the past three months as investors sharply priced in higher cross-strait risk and they now look to be “fairly priced.”
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