Taiwan shares edge slightly lower after recovering from early slide

Taipei, May 24 (CNA) Shares in Taiwan recovered most of their early losses Friday, helping the Taiex close well above the five-day moving average of around 21,450 points by the end of the trading session, dealers said.

While large cap semiconductor stocks came under pressure, artificial intelligence-related stocks attracted strong buying after Nvidia Corp.'s strong results overnight, and shipping stocks also rose amid increasing fright rates, dealers said.

The Taiex, the Taiwan Stock Exchange's weighted index, ended down 42.09 points, or 0.19 percent, at 21,565.34 after moving between 21,381.25 and 21,608.72. Turnover totaled NT$413.45 billion (US$12.81 billion).

The market opened down 0.76 percent and plunged to the day's low within the first five minutes of trading, as electronics heavyweights faced heavy selling after the Dow Jones Industrial Average fell 1.53 percent and the tech-heavy Nasdaq index fell 0.39 percent overnight.

The weakness among semiconductor stocks, especially contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), persisted, but buying in AI-related and transportation stocks emerged, helping the broader market rebound by the end of the session, dealers added.

"The initial losses reflected concerns about the next move by the U.S. Federal Reserve after Washington reported (on Thursday) a lower than expected weekly jobless claim report," Mega International Investment Services Corp. analyst Alex Huang said.

Weekly jobless claims ending on May 18 fell 8,000 to 215,000, coming in lower than the market estimate of about 220,000.

"The latest job data showed the U.S. economy remained resilient," Huang said. "Investors in Taiwan and the United States simply used the report as an excuse to trim their holdings amid fears of a hawkish Fed."

TSMC, the most heavily weighted stock in the local market, lost 0.91 percent to close at NT$867.00 after opening at the day's low of NT$858.00. The stock brought down the Taiex by about 65 points.

Among other semiconductor stocks, United Microelectronics Corp., a smaller contract chipmaker, dropped 2.50 percent to end at NT$54.60, and smartphone IC designer MediaTek Inc. lost 0.83 percent to close at NT$1,195.00.

Select highly-priced semiconductor stocks bucked the downturn, however, including application specific integrated circuit (ASIC) designer Alchip Technologies, Inc., which rose 3.68 percent to end at NT$2,820.00.

"Due to Nvidia's strong earnings, Taiwan's AI-related stocks in the downstream segment attracted strong buying, which offset the impact resulting from TSMC's losses in the electronics sector as well as on the Taiex," Huang said.

The electronics index lost 0.29 percent, while the semiconductor sub-index fell 0.79 percent.

iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, rose 1.73 percent to close at NT$176.00 amid optimism toward its shipments of AI servers. Quanta Computer Inc., another AI server provider, gained 0.88 percent to end at NT$286.50.

Also, PC brand Acer Inc., which recently unveiled new AI PCs, soared 7.88 percent to close at NT$57.50, and Taisol Electronics Co., a provider of cooling solutions to AI-related devices, gained 4.21 percent to end at NT$89.10.

"Today, the electronics sector was generally weak, but the old economy sector was better and prevented the broader market from falling further," Huang said, referring to the 2.68 percent rise of the transportation sector, where major shipping stocks are traded.

Among the container cargo shipping stocks, Wan Hai Lines Ltd. rose 5.34 percent to close at NT$74.90 after saying a day earlier that it was seeing demand on European routes picking up.

Rivals Evergreen Marine Corp. and Yang Ming Marine Transport Corp. also rose 5.02 percent and 3.09 percent, respectively, to end at NT$219.50 and NT$73.50.

The tourism industry staged a rebound, as well, gaining 0.98 percent.

"To me, it seemed the impact of China's ongoing military exercises around Taiwan was priced in yesterday in sectors that are more sensitive to ties with China, like the tourism sector," Huang said.

Among tourism stocks, Formosa International Hotels Corp. rose 2.97 percent to close at NT$243.00 and Chateau International Development Co. gained 1.77 percent to end at NT$57.40.

Lion Travel Service Co. added 1.66 percent to close at NT$153.50, and Phoenix Tours International, Inc. closed 2.77 percent higher at NT$74.10.

"Despite Friday's fall, the Taiex showed its resilience to close above the five-day moving average, but it could encounter strong stiff technical resistance at around 21,800 to 22,000 points," Huang said.

"Next week, Washington will report the April Personal Consumption Expenditures Price (PCE) Index, one of the favorites of the Fed to assess its monetary policy," Huang said.

According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$6.06 billion in shares on the market Friday.