Taiwan shares end down slightly led by tech sector

Taipei, May 17 (CNA) Shares in Taiwan closed slightly lower Friday as selling focused on the bellwether electronics sector in the wake of losses suffered by tech stocks on U.S. markets overnight on profit taking, dealers said.

Buying rotated to the non-tech sector with large cap financial stocks in focus as government-led funds are believed to have picked up these stocks to stabilize the main board ahead of the presidential inauguration on May 20, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 45.79 points, or 0.21 percent, at 21,258.47 after moving between 21,218.34 and 21,346.75. Turnover totaled NT$415.58 billion (US$12.89 billion).

The market opened up 0.20 percent at the day's high on follow-though buying from a session earlier, when the Taiex rose 0.74 percent.

Selling soon set in for select large cap electronics stocks, in particular contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) after its American depositary receipts (ADRs) dropped 2.15 percent Thursday, dealers said.

The weakness of the local electronics sector came after the tech-heavy Nasdaq index fell 0.26 percent and the Philadelphia Semiconductor Index dropped 0.55 percent in the wake of hawkish Federal Reserve officials warning that high interest rates would remain for longer, dealers added.

With support from financial stocks and certain old economy stocks, the main board moved in a narrow range for the rest of the trading session, dealers said.

"After recent solid gains with the Taiex repeatedly hitting new highs, investors simply seized on U.S. market tech losses as an excuse to lock in their profits today, and TSMC was their target," Concord Capital Management Lu Chin-wei said.

TSMC, the most heavily weighted stock on the local market, fell 0.71 percent to close at NT$835.00. The stock's downturn contributed about 50 points to the Taiex's decline and sent the electronics index lower by 0.36 percent.

"However, compared with its ADRs, TSMC shares in Taiwan remained resilient today although the ADRs continued to trade at a high premium over the stock in Taipei despite the loss on Thursday. Therefore, the broader market also traded in a narrow range throughout the sessions," Lu said.

As of Thursday, TSMC's ADRs traded at a premium of about 16 percent over the stock in Taiwan.

"While riding the wave of enthusiasm over artificial intelligence development, it is very likely that TSMC will soon challenge NT$856.00, an intraday high recorded on Thursday," Lu said.

In addition to TSMC, iPhone assembler Hon Hai Precision Industry Co., No.2 in terms of market value in Taiwan, dropped 0.87 percent to end at NT$170.00, adding downward pressure on the Taiex.

Among other semiconductor stocks, smartphone IC designer MediaTek Inc. shed 2.10 percent to close at NT$1,165.00, and dynamic random access memory (DRAM) chip supplier, dropped 1.88 percent to end at NT$62.80, while United Microelectronics Corp., a smaller contract chipmaker, gained 1.34 percent to close at NT$52.80.

Downstream electronic gadget suppliers were boosted by the AI frenzy with AI server maker Quanta Computer Inc. up 3.25 percent to end at NT$286.00, and Giga-Byte Technology Co., a leading graphics card vendor for AI applications, up 2.54 percent to close at NT$322.50.

Bucking the uptrend, PC brand Asustek Computer Inc. ended little changed at NT$516.00.

"Fortunately, financial heavyweights attracted buying to lend support to the broader market, offsetting the impact of tech losses," Lu said. "I suspect government-led funds stood behind the buying to limit the losses ahead of May 20."

In the financial sector, which rose 0.57 percent, E. Sun Financial Holding Co. gained 2.47 percent to close at NT$29.00, CTBC Financial Holding Co. grew 1.60 percent to end at NT$38.10, and Fubon Financial Holding Co. added 0.95 percent to close at NT$74.60.

In contrast, Cathay Financial Holding Co. ended flat at NT$56.40.

Some old economy stocks in the renewable energy and national defense industries also drew market attention on expectations that the ruling Democratic Progressive Party will continue to support companies in the two industries after May 20, Lu said.

Among these stocks, Century Iron and Steel Industrial Co., which has invested in offshore wind energy development, rose 3.91 percent to close at NT$252.50, while aircraft parts designer and manufacturer Aerospace Industrial Development Corp. also increased 3.05 percent to end at NT$57.40.

In the construction industry, which rose 1.42 percent on hopes of an increase in urban renewable projects, Hung Ching Development & Construction Co. soared 6.14 percent to close at NT$49.25, and Goldsun Building Materials Co. ended up 3.40 percent at NT$50.20.

"Next week, AI chip designer Nvidia Corp. will report its earnings and give guidance, which could move tech stocks on U.S. and Taiwan markets. Keep alert," Lu said. Nvidia's investor conference is scheduled for May 22 U.S. time.

According to the TWSE, foreign institutional investors bought a net NT$1.49 billion worth of shares on the main board Friday.