Taiwan shares end higher to close above 17,500 points

03/21/2022 05:44 PM
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CNA file photo
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Taipei, March 21 (CNA) Shares in Taiwan moved higher Monday as investors took cues from a rally in the U.S. markets at the end of last week, but the gains were capped, dealers said.

The bellwether electronics sector led the local main board in moving higher with the semiconductor industry in focus, and buying spread to raw material stocks, in particular in the steel sector, which boosted the broader market and enabled it to rise above 17,500 points, they said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up by 103.84 points, or 0.59 percent, at 17,560.36, after moving between 17,503.95 and 17,603.99. Turnover totaled NT$258.26 billion (US$9.07 billion).

The market opened up by 0.27 percent, and with buying escalating, the Taiex surged by about 150 points to hit the day's high in the mid-morning session in the wake of gains on the U.S. markets.

There, the Dow Jones Industrial Average rose by 0.80 percent and the tech-heavy Nasdaq index soared by 2.05 percent Friday, dealers said.

However, some investors shifted to the sell side to lock in their earlier profits to cap the upturn on the broader market, while the electronics and steel sectors helped the Taiex sustain part of its earlier gains until the end of the session, they said.

"Today's gains largely followed the upturn on the U.S. markets as investors temporarily set aside worries about the military conflict between Russia and Ukraine," Hua Nan Securities analyst Kevin Su said.

"But, the willingness to chase prices appeared weak as investor sentiment remained cautious as fears over fund outflows continued to weigh on the market," Su added, referring to a move by the U.S. Federal Reserve to kick off a rate hike cycle last week.

On March 16, the Fed announced it would raise its key interest rates by 0.25 percentage points, hinting that an additional six rate increases will come later in the year.

On the following day, Taiwan's central bank followed suit in raising its discount rate, also by 25 basis points.

"So, the Taiex saw its upturn limited in particular as the index moved closer to the nearest technical resistance of around 17,633, an intraday low seen on Jan. 26," Su said. "Fortunately, the tech sector remained on an uptrend throughout the session despite some profit-taking."

The electronics sector rose by 0.56 percent with the semiconductor sub-index up by 0.84 percent.

In the semiconductor industry, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, rose by 0.86 percent to close at NT$586.00 after hitting NT$589.00.

"With interest rates on the rise, tech stocks are expected to continue to lose their luster," Su said. "It is possible for TSMC to see purchases of its shares capped as its share price moves closer to NT$600.00, the nearest technical ceiling for the stock."

Among other semiconductor stocks, United Microelectronics Corp., a smaller contract chipmaker, rose by 1.33 percent to end at NT$53.50; power management IC designer Silergy Corp. increased by 1.67 percent to close at NT$3,355.00; and application specific IC (ASIC) designer Alchip Technologies, Ltd. rose by 3.04 percent to end at NT$948.00.

Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. bucked the upturn, falling by 1.42 percent to close at NT$104.50, although the company announced earlier in the day that production in its plants in Shenzhen had returned to normal as the Chinese city eased a lockdown that had been implemented to curb an COVID-19 outbreak.

In addition, power management solution provider Delta Electronics Inc. rose by 1.95 percent to end at NT$261.00, and PC brand Asustek Computer Inc. increased by 0.54 percent to close at NT$374.50, while Acer Inc., another PC brand, ended unchanged at NT$30.30.

"Select old economy stocks, especially the steel sector, also served as an anchor to stabilize the Taiex," Su said.

The steel sector's stocks increased by 2.28 percent in the wake of reports that Azovstal Iron and Steel Works in Ukraine, one of the largest steelmakers in Europe, had been destroyed by Russia, which pushed up global steel prices.

China Steel Corp., the largest steelmaker in Taiwan, rose by 1.79 percent to close at NT$39.75, and Chung Hung Steel Corp. soared by 7.39 percent to end at NT$47.20.

Riding the wave of growing crude oil prices, Formosa Plastics Corp. rose by 1.42 percent to close at NT$107.50, and Taita Chemical Co. increased by 0.89 percent to end at NT$34.15.

In the textile sector, which is also crude price sensitive, Tung Ho Textile Co. rose by 3.40 percent to close at NT$18.25, and Eclat Textile Co. increased by 4.11 percent to end at NT$468.50.

"Investors better pay attention to the value of the Taiwan dollar versus the greenback for clues about whether foreign institutional investors continue to move funds out of the country," Su said.

According to the TWSE, foreign institutional investors bought a net NT$196 million worth of shares on the main board Monday.

(By Frances Huang)

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