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Taiwan shares end at fresh high as tech stocks steam ahead

06/13/2024 08:31 PM
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CNA photo June 13, 2024
CNA photo June 13, 2024

Taipei, June 13 (CNA) Shares in Taiwan hit another closing high, soaring more than 260 points Thursday, as local investors brought up large tech stocks in the wake of a strong showing on the U.S. markets overnight, dealers said.

Investors were relieved to see inflationary pressures in the U.S. easing, as indicated by a cooler-than-expected Consumer Price Index (CPI) for May, dealers added, noting this relief sparked liquidity-led buying.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 263.08 points, or 1.19 percent, at 22,312.04 after moving between 22,211.08 and 22,400.10. Turnover totaled NT$516.962 billion (US$15.98 billion).

The market opened up 0.77 percent and momentum accelerated with large-cap electronics stocks in focus as investors took cues from a 1.53 percent increase in the tech-heavy Nasdaq index and a 2.90 percent rise in Philadelphia Semiconductor Index overnight, dealers said.

Led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and iPhone assembler Hon Hai Precision Industry Co., the Taiex breached 22,400 points at one point, before gains dipped slightly by the end of the session due to some investors pulling their profits, dealers added.

However, the main board's closing level still beat the previous high of 22,048.96 recorded Wednesday.

U.S. CPI, Fed decision

"The U.S. May CPI data appeared encouraging, prompting investors to anticipate a dovish Federal Reserve," Cathay Futures Consultant analyst Tsai Ming-han said.

In May, the U.S. CPI rose 3.3 percent from a year earlier, down from a 3.4 percent rise in April. The May figure was also below the previous market estimate of 3.4 percent.

The Fed wrapped up a two-day policymaking meeting overnight, leaving interest rates unchanged, and hinting no members of the board had expected a rate hike this year. It also alluded rates would be cut once this year, compared with the three cuts alluded to earlier this year.

"With no Fed officials saying rates would rise this year, investors at home and abroad rushed to buy interest rate sensitive tech stocks," Tsai said. "In Taiwan, TSMC is always their top choice."

Tech stocks

TSMC, the most heavily weighted stock in the local market, rose 1.43 percent to close at NT$919.00 after coming off a high of NT$935.00. TSMC's gains contributed about 106 points to the Taiex rise and sent the electronics index and semiconductor sub-index higher by 1.57 percent and 1.59 percent, respectively.

"TSMC's gains seem to be moderating today as some investors began selling to lock in profits. But, the stock's momentum is expected to continue in the wake of its strong fundamentals amid the booming artificial intelligence era," Tsai said, referring to the chipmaker's 2.94 percent increase on Wednesday.

Tsai said other tech heavyweights also attracted solid interest with Hon Hai, second to TSMC in terms of market value, forecasting its AI server sales to grow more than 40 percent in 2024.

Hon Hai gained 2.40 percent to end at NT$192.00, off a high of NT$195.00.

"Today's buying also featured some tech stocks which had been consolidating for a while. MediaTek Inc. is one that pushed the Taiex up further," Tsai said.

Smartphone IC designer MediaTek, No. 3 in market value, soared 6.54 percent to close at NT$1,385.00 after the media reported the company to be working with Microsoft Corp. to develop chips used in AI PCs.

"Now, the tech sector appears rosier than the non-tech sector," Tsai said. "Furthermore, semiconductor stocks seem to be more attractive than other electronics stocks."

Among the semiconductor stocks, United Microelectronics Corp., a smaller contract chipmaker, rose 2.73 percent to end at NT$56.40, memory chip supplier Nanya Technology Corp. gained 2.17 percent to close at NT$66.00, and IC packaging and testing services provider ASE Technology Holding Co. ended up 0.92 percent at NT$164.00.

Old economy sector

"At a time when large-cap tech stocks absorbed most market liquidity, old economy stocks were largely marginalized," Tsai said. "But, today electric machinery stocks performed well on rotational buying."

In the electric machinery industry, which rose 2.55 percent, Fortune Electric Co. rose 6.22 percent to close at NT$837.00, Allis Electric Co. gained 4.64 percent, and Shihlin Electric & Engineering Corp. closed up 3.38 percent at NT$245.00.

Elsewhere in the old economy sector, textile brand Far Eastern New Century Corp. lost 0.29 percent to end at NT$34.75, and rival Makalot Industrial Co. shed 1.90 percent to end at NT$387.50. In addition, Formosa Plastics Corp. dropped 0.49 percent to close at NT$60.60, and Formosa Chemicals & Fibre Corp. ended down 0.19 percent at NT$51.70.

The financial sector rose 0.26 percent due to improving profits, with Cathay Financial Holding Co. up 0.35 percent to close at NT$58.10 and Fubon Financial Holding Co. up 0.26 percent to end at NT$76.20.

"After recent solid gains, the Taiex could soon see more profit-taking but it is likely to experience strong technical support ahead of the five-day moving average (of 21,982 points)," Tsai said.

According to the TWSE, foreign institutional investors bought a net NT$32.30 billion worth of shares on the main board Thursday.

(By Pan Chih-yi and Frances Huang)

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