Taiwan shares edge higher as earlier gains eroded

Taipei, July 1 (CNA) Shares in Taiwan closed slightly higher Monday with investors taking advantage of the main board's initial gains to cap the upturn by the end of the session, dealers said.

Large cap tech stocks, despite encountering profit taking, still served as an anchor stabilizing the broader market amid continued optimism over artificial intelligence development, while many investors appeared reluctant to chase prices for the moment, after a recent strong performance on the main board, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 26.32 points, or 0.11 percent, at 23,058.57 after moving between 23,015.17 and 23,187.88. Turnover totaled NT$428.35 billion (US$13.18 billion).

The market opened up 10.45 points and rose to the day's high, up about 155 points, in the mid-morning session, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and iPhone assembler Hon Hai Precision Co., amid AI frenzy, dealers said.

However, with the Taiex moving closer to 23,200 points, some investors shifted to the sell side to trim their holdings in the bellwether electronics sector, letting some air out of the gains by the end of the session, dealers added.

Taiex in cosolidation

"Judging from today's movement, I think the Taiex has fallen into consolidation after a recent robust rally," Hua Nan Securities analyst Kevin Su said. "Technical factors stood behind the failure to sustain all of the earlier strength."

In the first half of this year, the Taiex soared about 28.4 percent to stand above the 23,000 point mark.

"In addition, several major economies in the world will hold national elections this year, and investors have tended to step back for now, watching closely what impact political factors will bring to the financial markets," Su said, referring to the parliamentary election in France, in which Marine Le Pen's far-right National Rally party led the first round of the vote Sunday.

"Moreover, uncertainties in the looming U.S. presidential election have been raised by (incumbent Joe) Biden's disastrous performance in a debate with (Donald) Trump last week," Su said.

TSMC, Hon Hai and other large cap stocks gave up part or all of their initial gains, "but I expect buying in these stocks to resume after the consolidation, with AI development likely to lead them to steam ahead, Su added."

TSMC, the most heavily weighted stock on the local market, which is believed to provide chips made on its advanced processes to U.S.-based AI chip designer Nvidia, rose 0.21 percent to close at NT$968.00 after coming off a high of NT$977.00.

As the second largest cap stock in Taiwan, Hon Hai, also known as Foxconn on the global markets, which has forecast its AI server sales will grow more than 40 percent this year, gained 0.93 percent to end at NT$216.00 after hitting NT$217.00.

Among other AI-related stocks, AI server supplier Quanta Computer Inc. lost 1.12 percent to close at NT$308.50, while Giga-Byte Technology Co., a leading graphics card vendor for AI applications, rose 0.33 percent to end at NT$306.50.

In addition, Wistron Corp., another AI server maker, rose 1.42 percent to close at NT$107.50, but Wistron's cloud application subsidiary, Wiwynn Corp., lost 1.52 percent to end at NT$2,605.00.

Also in the electronics sector, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., fell 1.64 percent to close at NT$2,700.00, while power management solutions provider Delta Electronics Inc. ended up 0.77 percent at NT$390.50.

Old economy stocks

"Buying rotated to select old economy stocks, in particular in the construction industry today," Su said. "The industry staged a strong rebound after a recent slump caused by further measures by the central bank (announced in mid-June) to curb speculation."

With the construction index up 2.65 percent, Cathay Real Estate Development Co. rose 2.65 percent to close at NT$31.00, and Goldsun Building Materials Co. gained 4.99 percent to end at NT$45.22. In addition, Kindom Construction Co. soared 6.78 percent to close at NT$58.30, and JSL Construction & Development Co. rose 5.08 percent to end at NT$196.50.

On the other hand, the electric machinery index lost 0.96 percent with Shihlin Electric & Engineering Corp. falling 2.19 percent to close at NT$290.00, and Allis Electric Co. shedding 2.35 percent to end at NT$145.50.

In the financial sector, which rose 0.35 percent, Fubon Financial Holding Co. gained 1.39 percent to close at NT$80.40, and Cathay Financial Holding Co. added 1.93 percent to end at NT$58.10.

"Listed companies will report their May sales (by July 10), which could move their shares," Su said. "Fundamentals of individual companies are important to decide which stocks investors can buy now at a time of consolidation on the broader market."

Despite the gains on the Taiex, foreign institutional investors sold a net NT$6.50 billion worth of shares on the main board Monday, according to the TWSE.