Taiwan shares end down but off low as TSMC returns to NT$1,000

Taipei, July 18 (CNA) Shares in Taiwan closed sharply lower by falling more than 370 points Thursday but came off the day's low as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) recouped part of its earlier losses to return to the NT$1,000 (US$30.67) mark, dealers said.

The chipmaker, however, remained haunted by worries over its global expansion after U.S. Republican presidential candidate Donald Trump accused Taiwan of taking "100 percent of our chip business," dealers added.

The Taiex, the Taiwan Stock Exchange's (TWSE) weighted index, ended down 371.35 points, or 1.56 percent, at 23,398.47 after moving between 23,148.74 and 23,450.91. Turnover totaled NT$579.34 billion (US$17.77 billion).

TSMC

The market opened down 396.81 points, or 1.67 percent, as TSMC extended its losses from a session earlier after its American depositary receipts (ADR) plunged almost 8 percent on the U.S. markets overnight as Trump's talk continued sending ripples through the equity markets at home and abroad, dealers said.

With the Taiex falling to the day's low, down 621.08 points, or 2.68 percent, some bargain hunters jumped into the market and picked up TSMC, in particular, in the late session, helping the stock and the broader market climb out of the bottom of the session, dealers said.

"The bargain hunting in TSMC shares came largely as many investors had high hopes that the chipmaker will give positive leads in an investor conference slated to open after the market close," Concord Securities analyst Kerry Huang said.

"But, the Taiex still fell below the nearest technical support ahead of the 20-day moving average of 23,459 points and more volatility could follow," Huang said.

After the stock market closed, TSMC announced it posted NT$247.85 billion in net profit in the April-June period, up 36.3 percent from a year earlier and 9.9 percent from a quarter earlier, dealers said.

July 18: TSMC reports highest net profit for Q2

July 18: TSMC overseas expansion plans unchanged despite Trump criticism

TSMC, the local market's most heavily weighted stock, fell 2.43 percent to close at NT$1,005.00, coming off a low of NT$986.00, dealers added.

In an interview with Bloomberg Businessweek published Wednesday, Trump said Taiwan should pay the United States for its defense.

"Trump's talk has raised worries that the U.S. government will cut or even cancel its subsidies for TSMC's investment once Trump wins the election," Huang said, referring to the direct funding of up to US$6.6 billion under a non-binding preliminary memorandum of terms (PMT) signed with the U.S. Department of Commerce in April for the chipmaker's US$65 billion investment in Arizona.

Meanwhile, iPhone assembler Hon Hai Precision Industry Co., also known as Foxconn on the global market and second to TSMC in terms of market value, shed 3.77 percent to end at NT$204.00.

Led by TSMC and Hon Hai, the bellwether electronics sector lost 2.31 percent, driving the Taiex to fall, Huang said.

TSMC's selling spread to other large-cap semiconductor stocks with smartphone IC designer MediaTek Inc. down 3.40 percent to close at NT$1,280.00 and IC packaging and testing services provider ASE Technology Holding Co. down 3.56 percent to end at NT$176.00.

Also in the tech sector, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., dropped 1.79 percent to close at NT$3,010.00, while flat panel maker AUO Corp. appeared resilient, falling only 0.26 percent to end at NT$19.15.

Old economy sector

"When funds rotated out of the electronics sector, raw material stocks in the old economy sector looked attractive due to their relatively low valuations," Huang said, referring to the industries such as petrochemical, paper and steel.

The petrochemical index rose 1.29 percent with Formosa Plastics Corp. up 1.16 percent to close at NT$60.80 and Formosa Petrochemical Corp. up 2.16 percent to end at NT$66.30. In addition, Nan Ya Plastics Corp. added 0.60 percent to close at NT$50.70, and Formosa Chemicals & Fibre Corp. ended up 2.91 percent at NT$51.20.

In the steel industry, which rose 0.67 percent, China Steel Corp., the largest steel maker in Taiwan, gained 0.64 percent to close at NT$23.50, and Tung Ho Steel Corp. rose 1.70 percent to end at NT$71.90.

With the paper industry up 1.54 percent, YFY Inc. rose 2.46 percent to close at NT$31.20, and Longchen Paper & Packaging Co. grew 2.13 percent to end at NT$14.40.

In the financial sector, which also outperformed the broader market, up 0.1 percent, E. Sun Financial Holding Co. rose 1.33 percent to close at NT$30.45, First Financial Holding Co. gained 1.38 percent to end at NT$29.40, while Fubon Financial Holding Co. closed down 1.21 percent at NT$89.90.

"TSMC will give guidance for the third quarter and the entire 2024, which is worth watching," Huang said. "Investors should keep a close eye on how its ADRs will move tonight as its shares in Taipei are expected to follow suit."

According to the TWSE, foreign institutional investors sold a net NT$58.83 billion worth of shares on the main board Thursday.

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