Taiwan shares end up as major tech stocks continue to rise

Taipei, May 7 (CNA) Shares in Taiwan closed higher Tuesday as buying in large cap tech stocks continued after the gains posted on U.S. markets overnight, dealers said.

Market sentiment improved as investors at home and abroad embraced high hopes about a possible rate cut cycle by the U.S. Federal Reserve on the back of weaker than expected job data for April, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 130.22 points, or 0.63 percent, at 20,653.53 after moving between 20,493.80 and 20,689.19. Turnover totaled NT$406.154 billion (US$12.53 billion).

The market opened up 0.54 percent and soon rose to the day's high in the early morning session, with the bellwether electronics sector continuing to lead the upturn due to a 1.19 increase on the tech-heavy Nasdaq index and a 2.21 percent rise on the Philadelphia Semiconductor Index in the United States Monday, dealers said.

However, some investors shifted to the sell side, pushing the Taiex into negative territory in the mid-morning session before buying reemerged in select large cap tech stocks, including contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and iPhone assembler Hon Hai Precision Industry Co., to vault the index back into the black by the end of the session, dealers added.

TSMC, the most heavily weighted stock on the local market, rose 1.78 percent to close at NT$800.00. The stock's gains contributed more than 110 points to the Taiex's rise and sent the electronics index and semiconductor sub-index higher by 1.14 percent and 1.45 percent, respectively.

Hon Hai, also known as Foxconn on global markets and second to TSMC in terms of market value, gained 1.19 percent to end at NT$169.50.

"Buying in TSMC and Hon Hai remained strong amid optimism about their sound fundamentals," Mega International Investment Services Corp. analyst Alex Huang said. "The two top stocks exactly served as a driver to the Taiex's gains amid optimism over the Fed's rate cuts."

Huang said hopes about the Fed's policy easing came after the poorer than expected April non-farm payroll data, while some Fed officials' dovish remarks further raised rate cut expectations.

Among them, Richmond Fed President Thomas Barkin said on Monday that the current level of interest rates was restrictive enough to cool the economy to bring inflation back to the 2 percent alert set by the central bank.

Other semiconductor stocks appeared mixed with United Microelectronics Corp., a smaller contract chipmaker, down 0.19 percent to close at NT$51.60, while smartphone IC designer MediaTek Inc. rose 0.97 percent to end at NT$1,045.00.

Huang said buying rotated to PC related stocks giving additional support to the electronics sector.

PC brand Asustek Computer Inc. rose 2.56 percent to close at NT$460.00, and contract notebook computer maker Quanta Computer Inc., which also rolls out artificial intelligence servers, gained 1.91 percent to end at NT$267.00.

"While TSMC and Hon Hai attracted most of the market attention, non-tech stocks largely moved in weakness," Huang said, referring to the construction industry, which saw profit taking from gains in recent sessions.

After rising 0.99 percent Monday, the construction index fell 3.31 percent Tuesday, with Goldsun Building Materials Co. down 4.45 percent to close at NT$47.25, and Cathay Real Estate Development Co. down 4.32 percent to end at NT$37.65.

Elsewhere in the old economy sector, Chung Hwa Pulp Corp. shed 3.41 percent to close at NT$22.65, and Longchen Paper & Packaging Co. ended down 1.28 percent at NT$15.40.

In the financial sector, which lost 0.17 percent, Fubon Financial Holding Co. fell 0.14 percent to close at NT$69.90, and CTBC Financial Holding Co. dropped 0.28 percent to end at NT$36.00. In contrast, E. Sun Financial Holding Co. rose 0.36 percent to close at NT$28.20.

"After recent gains, the Taiex is moving closer to the historic intraday high of 20,883 points recorded on April 10," Huang said. "But I am afraid that it will not be easy for the main board to jump over that hurdle and close above that level if daily turnover stays below NT$500 billion."

According to the TWSE, foreign institutional investors bought a net NT$6.99 billion worth of shares on the main board Tuesday.