Taiwan shares end up above 11,200 points as TSMC bounces back

Taipei, Oct. 22 (CNA) Shares in Taiwan moved higher Tuesday to jump over stiff technical resistance ahead of an intraday high of 11,270 points seen in late January 2018, as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) staged a rebound, dealers said.

Buying also spread to other tech stocks in Apple Inc.'s supply chain, with iPhone assembler Hon Hai Precision Industry Co. in focus, while the financial sector continued to benefit from rotational buying to give the broader market another boost, the dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE), or Taiex, ended up 87.1 points, or 0.78 percent, at the day's high of 11,271.25 after coming off a low of 11,218.25, on turnover of NT$126 billion (US$4.12 billion).

The market opened up 0.33 percent as investors were encouraged to buy by gains posted on U.S. markets, where the Dow Jones Industrial Average closed up 0.21 percent and the S&P 500 index ended up 0.69 percent overnight, amid optimism toward trade talks between the United States and China, the dealers said.

Momentum on the Taiex accelerated as TSMC bounced back from recent weakness in the wake of a higher Philadelphia Semiconductor Index, which soared 1.88 percent Monday, and on the back of other large-cap stocks in the old economy and financial sectors, the local main board jumped the nearest hurdle of 11,270 points and vaulted past an intraday high of 11,282 recorded April 3, 1990, they said.

"Judging from the performance of the U.S. markets yesterday, I think concerns over global trade have eased for the time being, and investors at home and abroad appeared more willing to buy," Mega International Investment Services Corp. analyst Alex Huang said.

Fears over the Washington-Beijing trade dispute have been reduced to some extent after Chinese Vice Premier Liu He (劉鶴), the top negotiator from China said over the weekend that the two countries have made "substantial progress" on the trade issue, adding that China will work with the U.S. to address bilateral trade concerns.

"The global financial markets have turned upbeat that China and the U.S. will sign a trade deal at the upcoming APEC summit scheduled for next month for their initial phase of trade talks that wrapped up earlier this month," Huang said.

He said it was no surprise that buying was sparked soon after the local equity market opened Tuesday, with TSMC highlighted.

"TSMC has consolidated in the past few sessions as investors locked in their earlier gains built on optimism about the company's business outlook," Huang said. "Buying in TSMC shares was also triggered by its U.S. semiconductor counterparts overnight."

TSMC rose 1.38 percent to close at the day's high of NT$294.00, with 25.96 million shares changing hands. TSMC's gains contributed to a roughly 40-point increase in the Taiex and pushed up the bellwether electronics sector and the semiconductor sub-index by 1.02 percent and 1.10 percent.

Buying was also seen in other major tech stocks, in particular select Apple suppliers, on the back of better-than-expected shipments of the latest iPhones -- the iPhone 11 series -- which went on global sale Sept. 20, Huang said.

Among them, Hon Hai, which got a significant boost in late trading buying, rose 2.45 percent to close at NT$79.50, metal casing maker Catcher Technology Co. added 1.37 percent to end at NT$258.50, and smartphone camera lens supplier Largan Precision Co. grew 0.23 percent to close at NT$4,390.00.

"Looking at the strong showing in these large-cap tech stocks, I think foreign institutional investors simply stood behind their gains today," Huang said. After the market closed, the TWSE released data showing that foreign institutional investors bought a net NT$13.82 billion worth of shares on the main board Tuesday after a net buy of NT$4.73 billion a day earlier.

Moreover, Huang said, ample liquidity in the equity market prompted investors to look for investment targets to park their money, so the old economy and financial sectors also moved higher.

Among the gaining old economy stocks, Formosa Plastics Corp. rose 1.47 percent to close at NT$96.80, Formosa Chemicals & Fibre Corp. added 0.91 percent to end at NT$89.00 and Formosa Petrochemical Corp. gained 0.72 percent to close at NT$97.50.

In the financial sector, which ended up 0.43 percent, E. Sun Financial Holding Co. rose 0.95 percent to close at NT$26.55, Shanghai Savings and Commercial Bank gained 0.59 percent to end at NT$51.50, and Cathay Financial Holding Co. added 0.45 percent to close at NT$41.50.

"After today's gains, investors should keep alert over the next technical resistance level ahead of 11,350 points," Huang said. "In addition, the current earnings season is expected to dictate market sentiment."