Taiwan shares soar to end above 20,500 points on U.S. rallies

Taipei, May 6 (CNA) Shares in Taiwan surged nearly 200 points to close above the 20,500 point mark Monday, with buying sparked by the solid performance on U.S. markets at the end of last week amid renewed hopes over a rate cut cycle by the Federal Reserve, dealers said.

Artificial intelligence related tech stocks attracted strong interest and led the local main board higher, while the financial sector also posted gains throughout the session to lend additional support to the broader market, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 192.99 points, or 0.95 percent, at 20,523.31 after moving between 20,479.80 and 20,639.90. Turnover totaled NT$412.64 billion (US$12.76 billion).

The market opened up 0.74 percent and momentum continued as AI related stocks and select large-cap semiconductor stocks rode the wave of a 1.99 percent increase on the tech-heavy Nasdaq index and a 2.41 percent rise on the Philadelphia Semiconductor Index on U.S. markets Friday, in the wake of the poorer than expected job data in Washington, which prompted investors to turn upbeat about possible Fed rate cuts, dealers said.

Buying spread to financial stocks to boost the Taiex further before some investors shifted to the sell side to cap the upturn as the index came closer to 20,883 points, the historic intraday high seen on April 10, dealers added.

The latest U.S. nonfarm payroll report released on Friday showed 175,000 jobs were created in April, below the 240,000 the market had expected, while the April unemployment rate edged up from 3.8 percent in March to 3.9 percent.

"After the job data, the benchmark 10-year treasury yield fell (below 5 percent), indicating optimism increased about a dovish Fed," Concord Securities analyst Kerry Huang said.

"As a result, rate sensitive tech stocks moved higher on the U.S. markets and their counterparts simply followed suit in Taipei today," Huang said. "AI related stocks came under the spotlight led by AI server maker Hon Hai Precision Industry Co."

iPhone assembler Hon Hai, the second largest stock in terms of market value in Taiwan, which has forecast its AI server sales will grow more than 40 percent in 2024, surged 7.37 percent to close at NT$167.50.

"The stock was playing catch up with other major AI server suppliers on its relatively low valuation," Huang said.

Among other AI-related stocks, AI server maker Quanta Computer Inc. gained 2.14 percent to end at NT$262.00, and rival Wistron Corp. rose 2.70 percent to close at NT$114.00.

In addition, Giga-Byte Technology Co., a leading graphics card vendor for AI applications, gained 2.10 percent to end at NT$292.00.

"Some semiconductor heavyweights also moved higher but came off their highs, which compromised the upturn of the electronics sector," Huang said, referring to contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), which faced the nearest technical resistance ahead of NT$800.00.

TSMC, the most heavily weighted stock on the local market, rose 0.77 percent to close at NT$786.00, off a high of NT$793.00.

With TSMC off its high, the electronics index rose 0.95 percent to close at 1,059.16 after hitting a high of 1,066.45.

Smartphone IC designer MediaTek Inc. lost 0.48 percent to end at NT$1,035.00, off a high of NT$1,060.00, while dynamic random access memory (DRAM) chip supplier Nanya Technology Corp. rose 1.67 percent to close at NT$66.90, and Scientech Corp., an equipment supplier to TSMC, added 1.75 percent to end at NT$348.50.

"The financial sector benefited from proposed generous dividend payouts, moving sharply higher on rotational buying to lend additional support to the Taiex," Huang said.

In the financial sector, which rose 2.19 percent, CTBC Financial Holding Co., which has proposed issuing a high cash dividend of NT$1.8 per share -- the highest in 19 years -- rose 3.88 percent to close at NT$36.10.

Mega Financial Holding Co. gained 2.75 percent to end at NT$41.15 with investors happy at the firm's plan to give NT$1.8 per share in dividends, comprised of a NT$1.3 in cash dividend and a NT$0.5 stock dividend.

In addition, Fubon Financial Holding Co. rose 1.45 percent to close at NT$70.00, and Cathay Financial Holding Co. gained 1.39 percent to end at NT$50.90.

Huang said property developers also attracted attention due to recent strong home sales pushing up the construction index by 0.99 percent.

In the construction industry, King's Town Construction Co. soared 10 percent, the maximum daily increase, to close at NT$60.50, and JSL Construction & Development Co. also jumped 10 percent to end at NT$160.00.

Elsewhere in the old economy sector, shares in Taiwan Cement Corp. rose 1.85 percent to close at NT$33.00, and Asia Cement Corp. gained 1.25 percent to end at NT$44.50.

Food brand Uni-President Enterprises Corp. added 2.11 percent to close at NT$77.60.

"There are high technical hurdles on the main board ahead of the April 10 intraday high (20,883 points) and that's why the Taiex failed to sustain all of its earlier gains today," Huang said. "I do not rule out the possibility that the index will test 20,000 points again in the event of volatility on U.S. markets."

According to the TWSE, foreign institutional investors bought a net NT$21.66 billion worth of shares on the main board Monday.