Taiwan shares end above 18,000 points, led by TSMC

Taipei, Jan. 25 (CNA) Shares in Taiwan closed above the 18,000 point mark Thursday, rising more than 120 points, with contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) leading the main board higher, dealers said.

Buying in the bellwether electronics sector came as investors took their cue from a rally enjoyed by tech stocks on U.S. markets overnight, while old economy industries were dropped in favor of large cap semiconductor stocks throughout the session, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 126.79 points, or 0.71 percent, at 18,002.62 after moving between 17,894.83 and 18,014.26. Turnover totaled NT$293.49 billion (US$9.38 billion).

The market opened up 19.0 points and buying accelerated with TSMC in focus after the stock's American depositary receipts rose 2.09 percent on U.S. markets overnight, dealers said.

The strength in the semiconductor industry continued in the wake of a 1.54 percent increase on the Philadelphia Semiconductor Index on Wednesday as Netherlands-based semiconductor equipment supplier ASML reported better than expected earnings in the fourth quarter of last year, dealers added.

TSMC

TSMC, the most heavily weighted stock on the local market, rose 2.39 percent to close at NT$642.00. The stock's gains contributed about 120 points to the Taiex's rise, and boosting the electronics index and semiconductor sub-index by 1.12 percent and 1.89 percent, respectively.

It was the first time the Taiex closed above 18,000 points since Feb. 23, 2022, when the main board ended at 18,055.73 points.

"Thanks to TSMC, the Taiex overcame stiff technical resistance ahead of the psychological 18,000-point level," Hua Nan Securities analyst Kevin Su said. "Investors remain upbeat about TSMC's outlook in 2024 after an investor conference held last week."

At the investor conference, TSMC forecast its sales will rise 21-26 percent from a year earlier in 2024, beating an earlier market estimate of a 20 percent rise. Analysts attributed this optimistic outlook to the strong demand for high-end processes used in emerging technologies such as artificial intelligence and high-performance computing.

"TSMC's results showed solid demand for its extreme ultraviolet lithography (EUV) machines which are needed to roll out advanced chips, further supporting the positive outlook for the semiconductor industry," Su said.

After Thursday's rally, TSMC is expected to challenge NT$660.00 in the near future and vault the Taiex further ahead, Su added.

Other tech stocks

TSMC's buying spread to United Microelectronics Corp. (UMC), a smaller contract chipmaker, which gained 3.36 percent to end at NT$52.30 after its ADRs rose 1.11 percent overnight.

In addition, IC packaging and testing services provider ASE Technology Holding Co., which has TSMC as a major client, also moved higher by 2.24 percent to close at NT$137.00, while smartphone IC designer MediaTek Inc., second to TSMC in terms of market value, grew 0.75 percent to end at NT$943.00.

As a market laggard, iPhone assembler Hon Hai Precision Industry Co., the third largest cap stock in Taiwan, attracted bargain hunters and rose 1.49 percent to close at NT$102.00.

"I suspect buying in these large cap stocks largely came from foreign institutional investors, so smaller cap stocks were left behind as local major market players stood on the sell side to lock in profits and keep cash on hand with the Lunar New Year holiday looming," Su said.

According to the TWSE, foreign institutional investors bought a net NT$28.05 billion worth of shares on the main board Thursday. The index of the over-the-counter market, where smaller cap stocks are traded, fell 0.33 percent to end at 234.30.

Also in the tech sector, stocks related to AI development bucked the upturn on the main board, with AI server maker Quanta Computer Inc. falling 0.40 percent to NT$249.00 and rival Wistron Corp. losing 0.86 percent to end at NT$115.00.

Old economy sector

"With semiconductor stocks attracting large interest, the old economy sector largely moved in consolidation and underperformed," Su said.

Among them, Formosa Plastics Corp. lost 0.55 percent to close at NT$71.70, and Nan Ya Plastics Corp. ended down 0.33 percent at NT$60.50. In addition, China Steel Corp., the largest steel maker in Taiwan, dropped 0.20 percent to close at NT$25.10, and Chung Hung Steel Corp. shed 0.84 percent to end at NT$23.75.

The transportation index, particularly shipping stocks, was affected by concerns about the crisis in the Red Sea, where commercial vessels have been targeted by Houthi militants. This resulted in a decline of 0.88 percent in the transportation index, with Evergreen Marine Corp., Yang Ming Marine Transport Corp., and Wan Hai Lines Ltd. experiencing losses ranging from 1.10 percent to 1.49 percent.

In the financial sector, which rose 0.16 percent, Cathay Financial Holding Co. rose 0.34 percent to close at NT$44.35 and Fubon Financial Holding Co. ended up 0.31 percent at NT$64.60.

"Investors should keep a close eye on upcoming economic data from U.S. markets as they could serve as a barometer for when the Federal Reserve will adjust its monetary policy," Su said, referring to the first reading of fourth quarter U.S. GDP data due later in the day and the December personal consumption expenditure price index due Friday.