Taiwan shares end down, while Hon Hai hits 16-year high

Taipei, June 17 (CNA) Shares in Taiwan edged lower Monday with initial gains eroded as investors took cues from a lackluster performance on the U.S. markets at the end of last week, dealers said.

However, iPhone assembler Hon Hai Precision Industry Co., the second largest stock in terms of market value in Taiwan, hit a 16-year high at the close, providing some support to the broader market amid optimism toward its efforts in artificial intelligence development, dealers added.

The Taiex, the Taiwan Stock Exchange's (TWSE) weighted index, ended down 8.19 points, or 0.04 percent, at 22,496.53 after moving between 22,431.26 and 22,567.34. Turnover totaled NT$442.70 billion (US$13.68 billion).

The market opened down 0.16 percent and buying then set in to push up the Taiex to a historic intraday high at around 10 a.m., rising 62.62 points at one point with the momentum of the bellwether electronics sector resuming, dealers said.

However, in the wake of a narrow range trade on the U.S. markets, where the Dow Jones Industrial Average fell 0.15 percent, while the tech-heavy Nasdaq index rose 0.12 percent on Friday, investors here shifted to the sell side to lock in their earlier gains, pushing down the Taiex to negative territory by the end of the session, dealers added.

Hon Hai

"Fortunately, Hon Hai appeared resilient to close up at NT$200 to prevent the Taiex from falling further," MasterLink Securities analyst Tom Tang said. "Investors have embraced high hopes that Hon Hai will benefit from an increase in AI server sales in the current AI boom."

Hon Hai, also known as Foxconn on the global markets, which has forecast its AI server sales will rise more than 40 percent in 2024, rose 1.01 percent to end at NT$200.00, marking the first time for the stock to close at that level in about 16 years.

"Foreign institutional investors have expressed optimism toward Hon Hai's stock movement, making a massive purchase of the stock in recent sessions," Tang said, referring to a net buy of 130 million Hon Hai shares in about three months.

Since March 11, Hon Hai has moved higher by more than 90 percent to boost its market capitalization by NT$1.32 trillion to top NT$2.77 trillion Monday.

TSMC, tech stocks

"Although some other large-cap tech stocks moved down, their losses appeared limited so the broader market still fluctuated in consolidation after the Taiex hit a new closing high on Friday," Tang said, referring to contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, which dropped 0.11 percent to close at NT$921.00.

The electronics index rose 0.03 percent with the semiconductor subindex down 0.02 percent.

Among other semiconductor heavyweights, smartphone IC designer MediaTek Inc. lost 1.08 percent to end at NT$1,380.00, while United Microelectronics Corp., a smaller contract chipmaker, rose 0.71 percent to close at NT$56.70, and application-specific integrated circuit (ASIC) designer Alchip Technologies, Inc. gained 3.20 percent to end at NT$2,745.00.

Also in the electronics sector, flat panel maker Innolux Corp. gained 4.41 percent to close at NT$14.20, and rival AUO Corp. rose 1.37 percent to end at NT$18.55 on hopes that the upcoming Paris 2024 Summer Olympics will prompt consumers to buy new televisions to watch games.

Meanwhile, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., rose 3.57 percent to close at NT$2,610.00, and along with Innolux and AUO, the stock boosted the optoelectronics sub-index by 1.85 percent.

Non-tech sectors

"In line with the broader market, many nontech stocks also moved in consolidation, giving up their earlier gains. Electric machinery stocks were part of them," Tang said.

The electric machinery industry lost 0.50 percent to close at 447.56, hitting a high of 460.25 with Shihlin Electric & Engineering Corp. down 2.78 percent to close at NT$262.00, and Chung-Hsin Electric & Machinery Manufacturing Corp. down 3.66 percent to end at NT$184.00.

In addition, Fortune Electric Co. dropped 1.63 percent to close at NT$905.00, while Allis Electric Co. bucked the downturn, rising 2.21 percent to end at NT$139.00.

Rotational buying lifted the steel index by 0.94 percent with China Steel Corp., the largest steel maker in Taiwan, rising 0.86 percent to close at NT$23.45, and Tung Ho Steel Corp. gaining 0.73 percent to end at NT$69.20.

In the financial sector, which lost 0.18 percent, Cathay Financial Holding Co. fell 1.20 percent to close at NT$57.50, and Fubon Financial Holding Co. ended down 1.17 percent at NT$76.00.

"How the Taiex will move will depend on the performance of AI-related stocks on the U.S. markets," Tang said. "But, as TSMC still trades in a relatively low price to earnings multiple compared with Nvidia Corp., the stock could challenge the NT$1,000 level in the near future as playing catch up to push up the Taiex further."

According to the TWSE, foreign institutional investors sold a net NT$15.94 billion worth of shares on the main board Monday.