Taiwan shares end up led by tech sector after Nvidia rebound

Taipei, June 26 (CNA) Shares in Taiwan continued their momentum from the previous session to close moderately higher Wednesday, as large cap artificial intelligence related tech stocks steamed ahead in the wake of an almost 7 percent rebound by U.S.-based AI chip designer Nvidia Corp. overnight, dealers said.

However, funds rotated out of the non-tech sector, in particular financial stocks, to cap the upturn of the main board ahead of the 23,000 point mark by the end of the session, dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 110.72 points, or 0.48 percent, at 22,986.69 after moving between 22,893.75 and 23,074.74. Turnover totaled NT$461.39 billion (US$14.20 billion).

The market opened up 0.27 percent and buying accelerated with select AI-related heavyweights in focus as interest was triggered by Nvidia's strong rebound on U.S. markets Tuesday after a more than 13 percent plunge in the previous three sessions, dealers said.

With the Taiex breaching the 23,000 point level, rising almost 200 points in the early morning session, some investors shifted to the sell side to take profits before buying boosted contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), in the late session, helping the broader market maintain its strength by the end of the session, dealers said.

"With Nvidia staging a strong rebound overnight, it was no surprise that Taiwan's AI-related stocks followed suit, although the gains on the main board were limited by the end of the session," Concord Capital Management Securities analyst Lu Chin-wei said.

"The Taiex rebounded from a low yesterday by gaining more than 300 points and today's initial gains of almost 200 points to the intraday high prompted investors to lock in their gains," Lu said.

On Tuesday, the main board rose 0.27 percent at 22,875.97 after coming off a low of 22,503.00.

Higher price target for TSMC

TSMC, which is believed to provide chips made on its advanced 3 nanometer process to Nvidia, served as a driver to Wednesday's upturn. The most heavily weighted stock on the local market, rose 1.59 percent to close at the day's high of NT$960.00, and its gains sent the electronics index and semiconductor sub-index higher by 1.01 percent and 1.38 percent, respectively.

"Few have doubts about the current AI boom so that a foreign brokerage has raised its target on TSMC shares to more than NT$1,300," Lu said, referring to an Asian securities house's target price of NT$1,370, upgraded from the previous NT$1,025 on TSMC shares.

Among other AI-related tech stocks, IC packaging and testing services provider ASE Technology Holding Co. rose 2.07 percent to end at NT$172.50, AI server maker Quanta Computer Inc. gained 1.48 percent to close at NT$309.50, and smartphone IC designer MediaTek Inc. added 1.44 percent to end at NT$172.50.

Bucking the upturn, iPhone assembler Hon Hai Precision Industry Co., which has forecast its AI server sales will grow more than 40 percent this year, lost 0.47 percent to close at NT$210.00 after a 2.43 percent surge on Tuesday.

Despite TSMC's gains, other semiconductor stocks were mixed, with United Microelectronics Corp., a smaller contract chipmaker, up 0.35 percent to close at NT$56.60, and Global Unichip Corp., TSMC's application specific integrated circuit (ASIC) design subsidiary, down 0.63 percent to end at NT$1,575.00.

Also in the electronics sector, shares in Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., rose 0.74 percent to close at NT$2,740.00, while power management solution provider Delta Electronics Inc. ended down 0.52 percent to end at NT$385.00.

"When tech heavyweights were in the spotlight, the financial sector, which appeared resilient in recent sessions, lost its luster, which let some air out of the Taiex," Lu said.

Financial and old economy sectors

The financial sector fell 1.10 percent as investors pocketed their recent gains which had been built on hopes that its bottom line would improve in the third quarter, when large cash dividends will be received.

Cathay Financial Holding Co. shed 1.65 percent to close at NT$59.50, and Fubon Financial Holding Co. lost 0.89 percent to end at NT$77.80. In addition, E. Sun Financial Holding Co. dropped 1.03 percent to close at NT$28.80, and CTBC Financial Holding Co. ended down 0.92 percent to end at NT$37.65.

The old economy sector largely remained in the doldrums throughout the session as it was outshone by the tech sector, Lu said

The electric machinery industry reversed an uptrend of 1.75 percent Tuesday to fall 0.29 percent Wednesday with Shihlin Electric & Engineering Corp. down 2.53 percent to close at NT$289.50 and Chung-Hsin Electric & Machinery Manufacturing Corp. down 1.06 percent to end at NT$186.50.

In the transportation industry, which lost 1.00 percent, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, fell 0.99 percent to close at NT$200.00, and rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. dropped 1.96 percent and 2.94 percent, respectively, to end at NT$75.00 and NT$89.00.

Elsewhere in the old economy sector, Formosa Plastics Corp. shed 2.05 percent to close at NT$57.20, and textile brand Far Eastern New Century Corp. lost 3.56 percent to end at NT$35.25.

"Nvidia's movement is expected to continue to dictate movements in Taiwan's tech stocks as there are still worries the U.S. stock will face more volatility technically," Lu said. Before the recent consolidation, shares in Nvidia had moved sharply since the beginning of this year, paving the path for more profit taking, he said.

Despite the gains on the Taiex, foreign institutional investors sold a net NT$8.25 billion worth of shares on the main board Wednesday, according to the TWSE.