Taiwan shares tumble over 400 points as tech sector falters

Taipei, June 24 (CNA) Shares in Taiwan took a beating Monday, plunging more than 400 points as investors locked in profits in large cap tech stocks that they had built up in recent weeks, dealers said.

Selling focused on contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and other artificial-intelligence related stocks after AI chip design giant Nvidia Corp. slid by more than 3 percent in the United States on Friday, dealers said.

The Taiex, the Taiwan Stock Exchange's benchmark weighted index, ended down 439.69 points, or 1.89 percent, at the day's low of 22,813.70 after hitting a high of 23,131.68. Turnover totaled NT$499.27 billion (US$15.42 billion).

Nvidia stocks fall in U.S.

The market opened down 0.56 percent, and it continued to slide as investors sold off TSMC and other AI-related heavyweights following Nvidia's fall on Friday, dealers said, noting that those stocks tend to closely track movements in Nvidia's share price.

Local shares continued to fall to the end of the session and closed at the day's low, after TSMC, which is believed to provide high-end contract chip production services to Nvidia, shed 3.09 percent to close at NT$940.00.

TSMC's losses contributed about 250 points to the Taiex's decline alone on Monday and pushed down the electronics index and the semiconductor sub-index by 3.21 percent and 2.66 percent, respectively.

"TSMC drove the Taiex's significant gains last week," MasterLink Securities analyst Tom Tang said. "Investors simply used Nvidia's losses as an excuse to pocket their gains built in TSMC."

Last week, the Taiex rose 748.67 points, or 3.33 percent, with TSMC soaring 5.32 percent.

"Foreign brokerages remain upbeat about TSMC's fundamentals, citing its strong competitiveness in advanced processes, with one of them even expecting the stock to challenge NT$1,300," Tang said. "I think today's losses were technical in nature."

AI related stocks

Tang said other AI related stocks also moved lower, including iPhone assembler Hon Hai Precision Industry Co. The company, which has forecast a 40 percent increase in AI server sales in 2024, fell 2.83 percent to end at NT$206.00.

In addition, smartphone IC designer MediaTek Inc., which has worked with Nvidia in AI chip development, shed 5.37 percent to close at NT$1,410.00, and Quanta Computer Inc., another major AI server maker, ended down 4.85 percent at NT$304.00.

"The four stocks are heavily weighted in the Taiex (about 45 percent). It was no surprise that their losses moved the index lower throughout today's session," Tang said.

"The current consolidation could lead the Taiex and TSMC to test their nearest technical support at their 10-day moving averages of 22,700 points and NT$935.00, respectively," Tang cautioned.

TSMC's selling spread to other semiconductor stocks, with United Microelectronics Corp., a smaller contract chipmaker, closing 1.56 percent lower at NT$56.80, and IC packaging and testing services provider ASE Technology Holding Co. ending down 1.15 percent at NT$172.50.

Bucking the downturn in the tech sector, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., gained 0.39 percent to close at NT$2,605.00.

Flat panel brand Innolux Corp. gained 1.92 percent to end at NT$15.90 on a report that said the company will sell a 5.5-generation factory located in the Southern Taiwan Science Park to U.S.-based memory chip maker Micron Technology Inc.

Financial, old economy sectors

"While the tech sector faced headwinds, investors still looked for targets to park their funds. Today, select financial and old economy stocks drew their attention," Tang said.

"To me, financial stocks are attractive due to their relatively low valuations and stable cash dividend payouts," Tang added.

In the financial sector, which rose 0.38 percent, CTBC Financial Holding Co. rose 1.06 percent to close at NT$38.25, Yuanta Financial Holding Co. gained 1.02 percent to end at NT$34.50, and Cathay Financial Holding Co. added 0.33 percent to close at NT$60.30.

On the other hand, Fubon Financial Holding Co. lost 0.26 percent to end at NT$78.10.

"For some old economy stocks, they simply benefited from rotational buying and played catch-up with their tech counterparts," Tang said. "The food industry was one of them."

The food index rose about 1 percent, with Uni-President Enterprises Corp. up 1.72 percent to close at NT$82.90, and rival AGV Products Corp. up 3.24 percent to end at NT$12.75.

Elsewhere in the old economy sector, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, fell 1.47 percent to close at NT$201.00.

Rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. shed 2.24 percent and 3.79 percent, respectively, to end at NT$74.20 and NT$88.80 as the growth of the Shanghai Containerized Freight Index moderated.

Nvidia watch

"Nvidia shares remain worth watching and investors need to see whether the stock will stage a rebound Monday to give a boost to Taiwan's AI-related stocks," Tang said.

"Furthermore, Nvidia is scheduled to hold an annual general meeting Wednesday (U.S. time) and any news coming from the meeting is expected to move the stock and other tech counterparts," he said.

According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$45.18 billion in shares on the market Monday.