Taiwan shares end up after big swing

Taipei, June 25 (CNA) Shares in Taiwan closed higher Tuesday after a big swing during trading, with select large cap tech stocks recouping earlier losses caused by a plunge in the shares of artificial intelligence chip designer Nvidia Corp. on U.S. markets, dealers said.

The rebound helped the local main board overcame stiff technical resistance ahead of 22,567 points, an intraday high seen on June 17 and closed at the day's high, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 62.27 points, or 0.27 percent, at 22,875.97 after coming off a low of 22,503.00. Turnover totaled NT$464.80 billion (US$14.34 billion).

The market opened down 0.52 percent and selling increased pushing the Taiex down by more than 300 points in the early morning session as AI related stocks, in particular contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), came under pressure in the wake of a 6.68 percent plunge by Nvidia shares overnight, dealers said.

However, with the Taiex dipping below the intraday high of June 17, bargain hunters emerged, rushing to pick up TSMC and other large cap AI related stocks, leading the broader market to overcome their initial weakness and return to positive territory by the end of the session, dealers added.

"It was a meaningful technical rebound as the Taiex not only overcame technical resistance ahead of the 10-day moving average (of 22,768) but also ahead of the intraday high on June 17," Mega International Investment Services Corp. analyst Alex Huang said.

"The rebound showed many investors were willing to hunt bargains despite Nvidia's losses as there is no sign the current AI boom will take a U turn anytime soon. The AI fundamentals remains rosy," Huang said.

Among AI-related stocks in Taipei, TSMC, the most heavily weighted stock, rose 0.83 percent to close at NT$945.00 after hitting a low of NT$923.00 by falling 1.81 percent during the session.

Led by TSMC, which is said to provide advanced 3 nanometer chips to Nvidia, the electronics index and semiconductor sub-index rose 0.26 percent and 0.18 percent, respectively, Tuesday, after coming off their earlier lows.

In addition, AI server maker Quanta Computer Inc. rose 0.33 percent to end at NT$305.00 after hitting a low of NT$293.50, and rival Wistron Corp. also gained 0.47 percent to close at NT$108.00, off a low of NT$104.50.

iPhone assembler Hon Hai Precision Industry Co., which has forecast its AI server sales will grow more than 40 percent in 2024, stayed resilient and outperformed other tech stocks throughout the session to end up 2.43 percent at NT$211.00.

Despite TSMC's gains, other semiconductor stocks still headed south with United Microelectronics Corp., a smaller contract chipmaker, down 0.70 percent to close at NT$56.40, smartphone IC designer MediaTek Inc. down 1.77 percent to end at NT$1,385.00 and IC packaging and testing services provider ASE Technology Holding Co. down 2.03 percent to close at NT$169.00.

Also in the electronics sector, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., rose 4.41 percent to close at NT$2,720.00, and power management solution provider Delta Electronics Inc. gained 2.79 percent to end at NT$387.00.

"While large AI related stocks drew most market attention, the electric machinery industry also attracted strong buying amid hopes of growing demand for power grid equipment in the country," Huang said. "Such demand is expected to grow significantly as several multinational tech giants such as Google and Nvidia will build data centers in Taiwan, which need power consuming servers."

In the electric machinery industry, which rose 1.75 percent after recent consolidation, Allis Electric Co. gained 6.41 percent to close at NT$149.50, and Fortune Electric Co. grew 2.22 percent to end at NT$920.00.

In addition, Shihlin Electric & Engineering Corp. rose 2.41 percent to close at NT$297.00, and Chung-Hsin Electric & Machinery Manufacturing Corp. ended up 2.45 percent at NT$188.50.

Elsewhere in the old economy sector, Formosa Plastics Corp. lost 1.85 percent to close at NT$58.40, and Formosa Chemicals & Fibre Corp. fell 0.58 percent to end at NT$51.20.

Meanwhile, Cathay Real Estate Development Co. dropped 0.62 percent to close at NT$31.85, and Hung Ching Development & Construction Co. shed 3.34 percent to end at NT$46.35.

The financial sector closed up 0.13 percent, extending its strength from a session earlier. "Buying was triggered by hopes that financial holding companies will pocket large cash dividends from their equity investments in the third quarter," Huang said.

SinoPac Financial Holding Co. rose 1.97 percent to close at NT$25.90, Fubon Financial Holding Co. added 0.51 percent to end at NT$78.50, and Cathay Financial Holding Co. closed up 0.33 percent at NT$60.50, while CTBC Financial Holding Co. lost 0.65 percent to end at NT$38.00.

"U.S. markets are expected to continue to dictate the local main board, in particular interest rate sensitive tech stocks," Huang said. "Investors should pay close attention to the U.S. Personal Consumption Expenditures Price Index (PCE) data due later this week."

"I expect the Taiex will continue to move in a range between 22,500 and 23,400 points in the near future," he said.

According to the TWSE, foreign institutional investors sold a net NT$12.77 billion worth of shares on the main board Tuesday.