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Taiwan shares post limited gains as board nears this year's intraday high

11/29/2023 05:14 PM
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CNA file photo
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Taipei, Nov. 29 (CNA) Shares in Taiwan saw early gains partially eroded Wednesday ahead of high technical hurdles as the main board moved closer toward this year's intraday high of 17,463 points.

While most of the major industries on the main board fell into consolidation mode following Tuesday's rally, the bellwether electronics sector posted slight gains led by select large-cap stocks related to semiconductors and artificial intelligence development.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 29.31 points, or 0.17 percent, at 17,370.56 after moving between 17,323.27 and 17,441.79. Turnover totaled NT$321.72 billion (US$10.28 billion).

The market opened up 10.86 points and momentum pushed the Taiex in the early morning session to the day's high of 100.54 points due to follow-through buying from Tuesday, when the index rallied 1.19 percent.

With the index approaching 17,463 points, the intraday high seen on July 31, some investors began selling which sent the board into negative territory. A number of tech stocks then rallied through last-ditch buying, which led to the Taiex finishing the session positive.

Inflows of foreign funds

"The Taiex staged a significant rebound this month, with the consolidation preparation for another takeoff. The main board has seen large inflows of foreign funds due to a stronger Taiwan dollar amid eased concerns over a hawkish Federal Reserve," MasterLink Securities analyst Tom Tang said.

"Technically speaking, a pause is necessary for the main board to challenge the 17,463-point mark shortly," Tang said.

Before Wednesday, the main board had moved sharply higher by 1,339.98 points or 8.37 percent since the beginning of November, with foreign institutional investors registering a net buy of NT$222.11 billion worth of shares on the main board in that time.

According to TWSE, foreign institutional investors bought a net NT$9.89 billion on Wednesday, when the U.S. dollar closed sharply lower at NT$31.250 -- a NT$0.218 drop.

Nov. 29: U.S. dollar closes sharply lower on Taipei forex market

"Despite limited gains in the Taiex today, market sentiment is not bad at all in the wake of a dovish tone set by a Fed official overnight," Tang said.

On Tuesday, Fed Governor Christopher Waller said the American central bank's monetary policy is "currently well positioned" to slow the economy and bring inflation down to 2 percent, the alert level set by the bank.

Chip- and AI-related stocks

The electronics sector continued to trend higher, although in a narrow range, ending up 0.21 percent, with contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, falling only 0.17 percent to close at NT$574.00 after coming off a low of NT$570.00.

TSMC shares rose 1.23 percent on Tuesday.

"A pause is necessary for the Taiex to steam ahead again," Tang said. "I expect when TSMC hits the NT$580 mark, the main board is likely to rise past 17,463 points."

Among other semiconductor stocks, Global Unichip Corp., TSMC's application-specific integrated circuit (ASIC) design subsidiary, lost 1.22 percent to end at NT$1,625.00, and Alchip Technologies Ltd., another ASIC designer, shed 2.56 percent to close at NT$3,050.00.

Bucking the downturn, IC packaging and testing services provider ASE Technology Holding Co. gained 1.20 percent to end at NT$127.00, and smartphone IC designer MediaTek Inc., second to TSMC in terms of market value, rose 0.64 percent to close at NT$948.00 to offset the losses suffered by TSMC.

Also lending support to the broader market, select AI-related stocks moved higher with AI server supplier Quanta Computer Inc. rising 2.03 percent to end at NT$201.00, and rival Wistron Corp. up 0.86 percent to close at NT$93.30.

In addition, Giga-Byte Technology Co., a leading graphics card vendor for AI applications, ended up 3.62 percent at NT$243.50.

Old economy industries

"Old economy industries largely saw their gains in the previous session reversed today with local institutional buying on the decline," Tang said.

Among them, Taiwan Cement Corp. lost 0.72 percent to close at NT$34.25, and Asia Cement Corp. fell 0.24 percent to end at NT$42.00.

Meanwhile, Tung Ho Steel Corp. closed down 0.57 percent at NT$69.70, while China Steel Corp., the largest steel maker in Taiwan, dropped 0.57 percent to end at NT$26.20.

Elsewhere in the old economy sector, Shihlin Electric & Engineering Corp. lost 3.33 percent to close at NT$101.50, and Chung-Hsin Electric & Machinery Manufacturing Corp. shed 2.42 percent to end at NT$121.00.

In the financial sector, which lost 0.46 percent, Cathay Financial Holding Co. shed 0.54 percent to close at NT$45.75, and Fubon Financial Holding Co. ended down 0.31 percent at NT$63.70.

"A stronger Taiwan dollar may continue to draw foreign funds into the local market," Tang said. "But investors still should still pay attention to upcoming U.S. economic data for more clues about the Fed's next move."

Washington is slated to release its October personal consumption expenditures price index on Thursday.

(By Frances Huang)

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