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Taiwan shares end at new high following TSMC's strong gains

05/22/2024 07:31 PM
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Taipei, May 22 (CNA) Shares in Taiwan closed at a new high on Wednesday, soaring more than 300 points, as investors scrambled to pick up contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and other artificial intelligence-related stocks, dealers said.

The buying came following investor sentiment that U.S.-based AI chip designer Nvidia Corp. will report strong earnings in an investor conference scheduled for Wednesday (U.S. time), dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 315.08 points, or 1.48 percent, at 21,551.83 after moving between 21,248.99 and 21,567.48. Turnover totaled NT$439.81 billion (US$13.61 billion).

Wednesday's closing level topped the previous high of 21,304.26 points recorded on May 16. The day's high surpassed the previous intraday high of 21,515.52 points, also seen on May 16.

The market opened up 12.24 points and momentum quickly accelerated with TSMC, which provides high-end chips to Nvidia, attracting strong interest amid optimism about U.S. chip designer's results, dealers said.

TSMC's strength continued and spread to other AI-related downstream stocks, pushing up the Taiex further, resulting in the broader market reaching a new high, dealers added.

"The strong buying in TSMC demonstrated investors' optimism about Nvidia amid the AI boom," Hua Nan Securities analyst Kevin Su said. "TSMC, again, served as a driver to the Taiex gains due to its high weighting."

"As long as the AI frenzy continues, it is hard to predict when TSMC will face technical resistance following the latest rally," Su said.

TSMC, the most heavily weighted stock on the local market, surged 2.73 percent to close at a new high of NT$864.00, although the stock came slightly off an intraday high of NT$865.00.

Its gains contributed about 190 points to the Taiex rise and sent the electronics index and semiconductor sub-index higher by 2.14 percent and 2.41 percent, respectively.

"Investors also directed their attention to downstream AI stocks as they were upbeat about shipments of devices such as PCs which are empowered by AI," Su said.

Among them, PC brands Acer Inc. and Asustek Computer Inc., which have unveiled new AI PC models recently, soared 10 percent, the maximum daily increase, and 6.75 percent, respectively, to close at NT$53.00 and NT$552.00.

In addition, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, rose 1.81 percent to end at NT$169.00 as the company forecasted sales generated by the AI server division to grow more than 40 percent in 2024.

Quanta Computer Inc., another AI server supplier, rose 1.24 percent to end at NT$285.50.

Also in the semiconductor industry, United Microelectronics Corp., a smaller contract chipmaker, gained 2.04 percent to close at NT$55.00 after the company held a ceremony Tuesday to celebrate the moving of the first equipment tools into its new 12-inch wafer fab in Singapore.

Meanwhile, smartphone IC designer MediaTek Inc. rose 0.85 percent to end at NT$1,185.00, and IC packaging and testing services provider ASE Technology Holding Co. added 0.97 percent to close at NT$155.50.

Application-specific integrated circuit (ASIC) designer Alchip Technologies Inc. ended unchanged at NT$2,750.00.

"As the electronics sector attracted most of the buying in the market today, non-tech stocks were marginalized with just a handful of exceptions," Su said. On Wednesday, the tech sector accounted for almost 70 percent of the total turnover on the main board.

Among the old economy stocks that gained, Taiwan Cement Corp., which has been focusing on green energy development as a way to diversify its investments, rose 3.00 percent to close at NT$34.35. Food brand Uni-President Enterprises Corp. also gained 1.39 percent to end at NT$80.30 amid optimism about beverage sales in summer.

However, the electric machinery industry continued to suffer from falling profits, dropping 1.09 percent. In the industry, Fortune Electric Co. lost 5.48 percent to close at NT$690.00, and Shihlin Electric & Engineering Corp. dropped 2.81 percent to end at NT$242.00.

Elsewhere in the old economy sector, China Steel Corp., the largest steel maker in Taiwan, lost 1.20 percent to close at NT$24.60, while Tung Ho Steel Corp. ended unchanged at NT$70.10.

In addition, tourism stocks continued to feel the pinch from frozen travel ties across the Taiwan Strait and ended down 0.57 percent. Formosa International Hotels Corp. fell 1.23 percent to close at NT$241.00, and Lion Travel Service Co. dropped 1.56 percent to end at NT$158.00.

In the financial sector, which also underperformed compared to the tech sector, rose only 0.45 percent. Cathay Financial Holding Co. rose 1.08 percent to close at NT$56.00, and Fubon Financial Holding Co. gained 0.82 percent to end at NT$73.50.

"The gains on the U.S. markets seemed to be capped despite the tech-heavy Nasdaq index hitting a new high overnight as investors remained concerned about the next move by the Federal Reserve," Su said.

Su was referring to the Dow Jones Industrial Average and the tech-heavy Nasdaq index, which rose 0.17 percent and 0.22 percent, respectively.

"But, such concerns were largely ignored by investors in Taiwan, who focused on booming AI," Su said. "In addition to Nvidia's results, investors should pay close attention to the company's guidance."

According to the TWSE, foreign institutional investors bought NT$32.11 billion worth of shares on the main board Wednesday.

(By Frances Huang)

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