Taiwan stock market closes on new high with strong TSMC, Hon Hai gains

Taipei, July 8 (CNA) Taiwan's stock market rose by more than 300 points to close at a fresh high on Monday on the back of strong performances by chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and iPhone-assembler Hon Hai Precision Industry Co.

Market sentiment improved as investors witnessed major indexes for the U.S. markets hit record highs at the end of last week, driven by expectations of a potential rate cut by the U.S. Federal Reserve in September following the latest jobs data for June.

The Taiex, the Taiwan Stock Exchange's (TWSE) weighted index, ended up 321.56 points, or 1.37 percent, at 23,878.15, after moving between 23,505,86 and 24,011.64 during the trading session. Turnover totaled NT$551.98 billion (US$17.04 billion).

The market opened down 5.95 points and moved to the day's low, falling about 50 points in the early morning session.

The main board soon then regained its footing, led by the bellwether electronics sector, as investors bought into large cap local electronics stocks after taking cues from a 0.90 percent spike on the tech-heavy Nasdaq index and a 0.54 increase in the S&P 500 index -- which had both achieved record highs on Friday.

The strength of TSMC and Hon Hai continued into the end of the session amid hopes that the Fed will start a rate cut cycle as early as September. The U.S. jobless rate in June was reported at 4.1 percent, higher than the market's estimate of 4.0 percent.

TSMC, Hon Hai

TSMC rose 2.99 percent to close at NT$1,035.00 and its gains contributed around 245 points to the Taiex's rise, boosting the electronics index and the semiconductor sub-index by 2.07 percent and 2.68 percent, respectively.

Hon Hai, which has recently expanded efforts in artificial intelligence development, gained 5.59 percent to end on the day's high of NT$226.50. The stock rose above its prior ex-dividend level of NT$216.00 in five trading sessions after going ex-dividend on July 2.

"Buying in local electronics heavyweights appeared solid as investors here were encouraged by the U.S. gains after the job data," Concord Securities analyst Kerry Huang said. "After the jobs data, the treasury yields moved lower accordingly, demonstrating the rate cut hopes to boost rate sensitive tech stocks."

"As TSMC and Hon Hai absorbed large funds, it was no surprise that the Taiex steamed ahead sharply," Huang said, adding turnover of TSMC and Hon Hai shares totaled about NT$40 billion and NT$25.5 billion, respectively.

Interest in buying TSMC's shares spread to other large cap semiconductor stocks with United Microelectronics Corp., another microchip manufacturer, rising 3.36 percent to close at NT$55.30, and smartphone IC designer MediaTek Inc. gaining 5.19 percent to end at NT$1,420.00.

"Certain medium-sized electronics stocks also attracted buyers, giving another boost to the broader market," Huang said, referring to stocks like Unitech Printed Circuit Board Corp. which rose by the maximum daily increase of 10 percent to close at NT$42.50 and Compeq Manufacturing Co., another circuit board manufacturer, which gained 5.37 percent to end at NT$86.30.

Other tech stocks

Also in the electronics sector, power management solution provider Delta Electronics Inc. gained 3.88 percent to close at NT$402.00.

In addition, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., rose 4.66 percent to close at NT$3.,030.00.

It marks the first time in three years the stock has stood above the NT$3,000 mark after Largan's consolidated sales soared 50 percent from a year earlier to NT$4.04 billion in June ahead of a next generation AI-powered iPhone that is expected to debut in September.

Old economy sector

"While large tech stocks stole most of the market spotlight, old economy stocks largely moved in the doldrums," Huang said. "The transportation industry came under heavier pressure amid fears that freight rates will be capped by efforts made by U.S. President Biden to push for cease-fire talks between Israel and Hamas."

The transportation industry fell 3.83 percent in the session's trading.

Evergreen Marine Corp., the largest container cargo shipper in Taiwan, lost 4.62 percent to close at NT$175.50, while rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. fell 6.64 percent and 6.82 percent to end at NT$67.50 and NT$78.00, respectively.

Meanwhile, the electric machinery maker Fortune Electric Co. lost 3.31 percent to close at NT$32.05, and Allis Electric Co. dropped 3.28 percent to end at NT$147.50.

Bucking the downturn, Formosa Plastics Corp. rose 1.22 percent to close at NT$58.00, and Nan Ya Plastics Corp. added 0.92 percent to end at NT$49.25.

Financial stocks

The financial sector rose 0.74 percent as the weakness of the Taiwan dollar is expected to boost its overseas asset value when those assets are converted into local currency, Huang said.

Cathay Financial Holding Co. rose 1.63 percent to close at NT$62.30, and Fubon Financial Holding Co. gained 1.30 percent to end at NT$86.00.

"With the recent rally, I am concerned the Taiex has been overheated," Huang said. Since the beginning of this year, the Taiex has surged 33.17 percent.

"But as investors still hope TSMC will give positive leads in its investor conference (scheduled for July 18), the buying of TSMC stock is likely to continue to support the broader market before then," Huang added.

Despite the gains in the Taiex, foreign institutional investors sold a net NT$8.84 billion worth of shares on the main board on Monday.