Taiwan shares rebound, led by TSMC after going ex-dividend

Taipei, March 18 (CNA) Shares in Taiwan staged a technical rebound Monday from a slump at the end of last week on the back of a rally enjoyed by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), which returned to its prior ex-dividend level soon after the market opened, dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 197.35 points, or 1.00 percent, at 19,879.85 after moving between 19,706.11 and 19,879.86. Turnover totaled NT$420.13 billion (US$13.29 billion).

Monday's comeback came after the Taiex shed 1.28 percent Friday.

The market opened up 0.12 percent and momentum accelerated in the wake of TSMC buying and investors shrugging off the weakness on U.S. markets, where the Dow Jones Industrial Average fell 0.49 percent and the tech-heavy Nasdaq index lost 0.96 percent on Friday, dealers said.

With American AI chip designer Nvidia Corp. set to open its GPU Technology Conference (GTC) later Monday (U.S. time), the local electronics sector as a whole also attracted strong interest on hopes Nvidia will release positive leads about AI development at the meeting, dealers added.

"Friday's sell-off on the local main board reflected uncertainties over when and how the U.S. Federal Reserve will start a rate cut cycle as inflation in the United States remains sticky," Cathay Futures Consultant analyst Tsai Ming-han said.

"Despite a fall on the U.S. market Friday, shares in the local electronics sector simply bounced back with buying ignited by TSMC's solid performance," Tsai said.

TSMC, the most heavily weighted stock on the local market, rose 1.87 percent to close at NT$764.00.

The stock returned to its prior ex-dividend level soon after the market opened, indicating investors were willing to hold onto the stock based on its sound fundamentals even though its share price was cut by the amount of cash dividend per share the company will pay after the ex-dividend date.

For companies in Taiwan that issue cash dividends annually, the ex-dividend date is the date on which a stock begins trading after the cash dividend to be paid out on the previous year's earnings has been deducted.

TSMC, which started to issue cash dividends quarterly instead of annually in 2019, saw its opening reference price cut by NT$3.50 from its previous close of NT$753.00 to begin Monday's session at NT$754.00. Its strength continued until the end of the session.

TSMC's gains contributed about 115 points to the Taiex's rise and sent the electronics index up 1.47 percent Monday.

"TSMC buying spread to other semiconductor stocks," Tsai said. "Moreover, Nvidia's GTC also helped the local tech sector sustain its strength."

Shares in Scientech Corp., TSMC's IC packaging equipment supplier, rose 7.89 percent to end at NT$287.00 as the chipmaker is planning to build two advanced IC packaging plants in the southern Taiwan county of Chiayi to meet growing demand for high-end chips use in AI applications.

Meanwhile, smartphone IC designer MediaTek Inc. gained 3.08 percent to close at NT$1,170.00, and IC packaging and testing services provider ASE Technology Holding Co. added 3.27 percent to end at NT$158.00.

Alchip Technologies Ltd., an application specific integrated circuit (ASIC) designer, rose 1.66 percent to close at NT$3,665.00, while United Microelectronics Corp., a smaller contract chipmaker, lost 0.19 percent to end at NT$51.80.

Also in tech stocks, iPhone assembler Hon Hai Precision Industry Co., which forecast last week its AI server sales will grow more than 40 percent this year, rose 3.03 percent to close at NT$136.00.

Asia Vital Components Co., a supplier of cooling solutions to AI applications, gained 4.01 percent to close at NT$623.00.

The electronics sector accounted for more than 65 percent of Monday's total turnover on the main board as large cap tech stocks steamed ahead, dealers said.

"While the tech sector led the comeback on the broader market throughout the session, old economy and financial stocks remained largely in the doldrums," Tsai said.

Among falling old economy stocks, Ta Chen Stainless Pipe Co. lost 1.10 percent to close at NT$35.90, and China Steel Corp., the largest steel maker in Taiwan, ended down 0.63 percent at NT$23.70.

In the food industry, which lost 0.75 percent, Uni-President Enterprises Corp. dropped 1.55 percent to close at NT$76.30, and edible oil maker Taisun Enterprise Co. shed 2.52 percent to end at NT$21.30.

Bucking the downturn, the electric machinery index rose 3.39 percent amid continued optimism over the government's investments to strengthen electricity grid networks nationwide, Tsai said.

Shihlin Electric & Engineering Corp. soared 10 percent, the maximum daily increase, to close at NT$225.50, and Chung-Hsin Electric & Machinery Manufacturing Corp. gained 5.31 percent to end at NT$178.50.

In the financial sector, which lost 0.56 percent, Cathay Financial Holding Co. lost 0.21 percent to close at NT$47.55, and Fubon Financial Holding Co. ended down 0.14 percent at NT$69.50.

"After today's rebound, the Taiex moved closer to stiff technical resistance ahead of 20,000 points," Tsai said. "I expect consolidation will dominate trading in the short term."

"More important, the Fed will hold a policymaking meeting (Tuesday to Wednesday, U.S. time), and investors at home and abroad are expected to turn cautious, waiting for the central bank's comments about the economy."

Despite the gains on the Taiex, foreign institutional investors sold a net NT$8.63 billion worth of shares on the main board Monday, according to the TWSE.