The TAIEX yesterday closed lower after a volatile session amid concerns about further selling by foreign institutional investors, who are continuing to lock in gains, dealers said.
While many large-cap shares came under pressure, the government is believed to have entered the market to pick up select bargains in the financial sector to give support to the broader market, they said.
The TAIEX closed down 31.47 points, or 0.26 percent, at 12,232.91, on turnover of NT$209.042 billion (US$7.14 billion).
“Although the Dow Jones [Industrial Average] rebounded yesterday, the gains were not strong enough, prompting many investors to think that volatility on US markets will continue amid lingering concerns over a lack of new stimulus measures to mitigate the economic impact of the COVID-19 pandemic,” Hua Nan Securities Co (華南永昌證券) analyst Kevin Su (蘇俊宏) said.
“As long as US markets encounter more losses, foreign institutional investors are expected to cut their holdings on the local equity market, so such fears led many investors to become reluctant to chase prices and even shift to the sell side after today’s initial gains,” he said.
Foreign institutional investors yesterday sold a net NT$284 million of shares, Taiwan Stock Exchange data showed.
“The bright spot for today was that some large shares, in particular TSMC, benefited from late-session buying,” Su said. “I expect the buying came from government-led funds in a bid to cap the losses and boost investor sentiment.”
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) shares rose 0.24 percent to close at NT$424, after fluctuating between NT$421 and NT$428.
With TSMC bouncing back from its early lows, the electronics sector rallied to close down 0.65 percent at 583.90, after earlier hitting 579.33.
Shares of IC packaging and testing services provider ASE Technology Holding Co (日月光投控) also rebounded from a low of NT$58.2 to close at NT$58.9, up 1.2 percent.
Shares of iPhone assembler Hon Hai Precision Industry Co (鴻海精密) fell 0.93 percent to close at NT$74.3, while those of Largan Precision Co (大立光), a supplier of smartphone camera lenses to Apple Inc, shed 2.04 percent to close at NT$3,355 amid fears that the launch of the new iPhone models would be delayed.
In the financial sector, which closed up 0.98 percent, outperforming the broader market, shares of Mega Financial Holding Co (兆豐金控) rose 1.67 percent to close at NT$27.45.
E.Sun Financial Holding Co (玉山金控) shares rose 1.61 percent to close at NT$25.3, while those of Fubon Financial Holding Co (富邦金控) added 0.49 percent to close at NT$40.8.
“Buying in the financial sector provided more evidence of support from government-led funds, as financial heavyweights have long been among the favorites of those funds,” Su said.
Some old economy shares were boosted by bargain hunting, with those of China Steel Corp (中鋼), the nations’ largest steelmaker, rising 0.75 percent to close at NT$20.15.
Shares of textile maker Far Eastern New Century Corp (遠東新世紀) rose 1.01 percent to close at NT$25.1, while Asia Cement Corp (亞洲水泥) shares rose 1.49 percent to close at NT$40.8.
“How the TAIEX moves will depend on how the Dow [Jones] performs,” Su said. “With the approaching US presidential election causing uncertainty, investors had better stay alert about movements on US markets.”
The TAIEX’s nearest technical support level could be at about 12,000 points, he said.
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