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Taiwan shares end at new high as TSMC hits record

06/19/2024 05:10 PM
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CNA photo June 19, 2024
CNA photo June 19, 2024

Taipei, June 19 (CNA) Shares in Taiwan moved sharply higher by more than 450 points to close at a new record high Wednesday amid continued optimism over artificial intelligence development worldwide, dealers said.

Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the local market, hit a closing high, driving the main board up in the wake of a surge by U.S.-based AI chip designer Nvidia Corp. on U.S. markets overnight, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 452.11 points, or 1.99 percent, at 23,209.54 after moving between 22,858.45 and 23,275.30. Turnover totaled NT$603.34 billion (US$18.63 billion), compared with NT$469.26 billion on Tuesday.

The market opened up 0.44 percent and momentum vaulted the Taiex past the 23,000-point mark in the early morning session as the bellwether electronics sector steamed ahead, led by TSMC, after a 3.51 percent rise posted by Nvidia overnight amid the AI frenzy, dealers said.

The strength of the local main board continued with the Taiex rising by more than 500 points at one point in the late morning session before the upturn was capped by the end of the session on mild profit taking, dealers added.

"Investors here seemed impressed by the strong performance of Nvidia, which topped Microsoft Corp. to become the most valuable public company overnight amid AI driven buying," Concord Securities analyst Kerry Huang said.

"That's why strong buying in TSMC and other large cap AI-related stocks emerged soon after the local main board opened, pushing the Taiex past 23,000 points," Huang said.

"The solid buying in these tech heavyweights boosted Wednesday's turnover to more than NT$600 billion, well above Tuesday's level," Huang added.

TSMC, which provides contract production services to Nvidia, rose 4.03 percent to close at a new high of NT$981.00 after hitting an intraday high of NT$984.00. TSMC's gains contributed about 308 points to the Taiex's rise and boosted the electronics index and semiconductor sub-index by 2.72 percent and 3.45 percent, respectively.

"Taiwan's manufacturing activity improved significantly, largely on the back of global demand for AI applications. Recent buying also reflected a rebound in fundamentals," Huang said, referring to the May purchasing managers' index (PMI), a measure of the prevailing direction of economic trends in manufacturing, which soared 6.0 points from a month earlier to 55.4 and returned to expansion after 14 months of contraction.

In addition, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, which has forecast its AI server sales will grow more than 40 percent, gained 2.27 percent to end at NT$203.00.

Among other AI server suppliers, Quanta Computer Inc. soared 8.59 percent to close at NT$316.00 and Wistron Corp. gained 3.74 percent to end at NT$111.00.

"Large cap tech stocks such as TSMC, Hon Hai and Quanta, drew most market attention and that's why today's buying in the tech sector was uneven," Huang said.

In the electronics sector, United Microelectronics Corp. (UMC), a smaller contract chipmaker, closed unchanged at NT$56.80, while Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc. fell 0.94 percent to end at NT$2,635.00.

Meanwhile, dynamic random access memory (DRAM) chip supplier Nanya Technology Corp. lost 1.81 percent to close at NT$70.70. and flat panel maker AUO Corp. ended down 1.08 percent at NT$18.25.

"Such uneven buying was also seen across the broader market with many old economy stocks losing their luster today," Huang said.

The electric machinery industry came off a high and fell 0.55 percent at the end of the session with Fortune Electric Co. down 1.59 percent to close at NT$930.00, and Rexon Industrial Corp. down 0.77 percent to end at NT$45.15.

In the petrochemical sector, which lost 0.61 percent, Formosa Plastics Corp. fell 0.83 percent to close at 60.00, and Nan Ya Plastics Corp. dropped 0.80 percent to end at NT$49.90.

On the other hand, the transportation sector, where major shipping stocks are traded, gained 0.68 percent on the back of rising freight rates. Evergreen Marine Corp., the largest container cargo shipper in Taiwan, rose 0.75 percent to close at NT$200.50, and rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. gained 1.21 percent and 1.35 percent, respectively, to end at NT$75.00 and NT$90.00.

Elsewhere in the old economy sector, Asia Cement Corp. rose 2.37 percent to close at NT$43.15 and Taiwan Cement Corp. ended up 0.44 percent at NT$34.05 on their relatively low valuations.

In the financial sector, which rose 0.50 percent, Fubon Financial Holding Co. gained 1.04 percent to close at NT$77.80 and Cathay Financial Holding Co. ended up 0.17 percent at NT$59.00.

"How the Taiex will move will depend on how long TSMC's strength will continue," Huang said. "I expect TSMC will encounter technical resistance as it moves closer to the NT$1,000 mark. If the stock has a pullback, the Taiex will follow."

"Furthermore, investors had better watch closely the performance of tech stocks on the U.S. markets which are highly correlated to their Taiwanese counterparts," he said.

According to the TWSE, foreign institutional investors bought a net NT$48.55 billion worth of shares on the main board Wednesday.

(By Jiang Ming-yan, Chang Chien-chung and Frances Huang)

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