Taiwan shares make strong comeback after TSMC surges over 4%

Taipei, July 23 (CNA) Shares in Taiwan staged a strong technical rebound Tuesday from a plunge seen a session earlier as investors took cues from an overnight rally on the U.S. markets to pick up bargains on the local main board, dealers said.

The bellwether electronics sector led the gains after contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) soared more than 4 percent amid eased worries over geopolitical tensions regarding a possible second term for former U.S. President Donald Trump.

The Taiex, the benchmark weighted index on the Taiwan Stock Exchange (TWSE), ended up 614.85 points, or 2.76 percent, at the day's high of 22,871.84, off a low of 22,514.75. Turnover totaled NT$393.97 billion (US$12 billion).

The market opened up 1.16 percent with large-cap tech stocks, such as TSMC, in focus as buying was sparked by a 1.58 percent increase on the tech-heavy Nasdaq index and a 4.00 percent rise on the Philadelphia Semiconductor Index overnight, dealers said.

Momentum continued and turned even stronger in the late trading session to push up the Taiex to the day's high by close, helping the broader market recoup all of its losses, dealers added.

On Monday, the local main board slid 612.27 points, or 2.68 percent after U.S. President Joe Biden dropped his reelection bid. The market had suspected Trump, who appeared less friendly to Taiwan, was more likely to win November's election.

"Yesterday's plunge in the Taiex showed an overreaction to fears over geopolitical tensions as the U.S. markets appeared calm overnight," Cathay Futures Consultant analyst Tsai Ming-han said.

"Local bargain hunters simply seized on the rally enjoyed by tech stocks on the U.S. markets as a cause to rebuild their holdings in local electronics stocks," Tsai said. "As investors' attention shifted back to fundamentals, TSMC was one of their top picks in the current boom of artificial intelligence development."

Tsai said that despite Monday's heavy losses, foreign institutional investors only sold a net NT$7.75 worth of shares on the main board, much lower than a net sell of NT$64.36 billion recorded on Friday, when the Taiex dove 2.26 percent.

"The reduced net sell by foreign institutional investors did encourage bargain hunters to jump into the market today," Tsai said.

According to the TWSE, foreign institutional investors shifted to the buy side, registering a net buy of NT$12.64 billion worth of shares on the main board Tuesday.

Boosted by last-ditch buying, TSMC, the most heavily weighted stock in the local market, rose 4.26 percent to close at the day's high of NT$979.00. The stock's gains contributed about 320 points to the Taiex rise and sent the electronics index and semiconductor subindex up by 3.29 percent and 3.87 percent, respectively.

Tsai said buying also spread to other large-cap semiconductor stocks. Among them, IC packaging and testing services provider ASE Technology Holding Co. rose 5.18 percent to end at NT$172.50, smartphone IC designer MediaTek Inc. gained 4.08 percent to close at NT$1,275.00, and United Microelectronics Corp., a smaller contract chipmaker, ended up 2.19 percent at NT$51.30.

In addition, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, rose 4.68 percent to close at the day's high of NT$201.50 while contract notebook computer maker Quanta Computer Inc. grew 3.12 percent to end at the day's high o NT$297.00. The two companies have entered AI server production.

Also in the electronics sector, power management solution provider Delta Electronics Inc. rose 4.28 percent to close at NT$389.50, and Yageo Corp., the world's third largest multi-layer ceramic capacitor (MLCC) supplier, ended up 1.75 percent at NT$755.00.

"The financial sector served as another driver to the Taiex as many in the sector reported an improving profitability this year," Tsai said, referring to the latest 14 listed financial holding firms' net profit which rose more than 60 percent from a year earlier in the first half of this year.

In the financial sector, which added 1.78 percent, Fubon Financial Holding Co. rose 3.51 percent to close at NT$85.50, and Cathay Financial Holding Co. gained 2.50 percent to end at NT$61.50.

Tsai said interest in old economy stocks appeared strong with the transportation industry up 3.28 percent after recent consolidation.

Among the container cargo shippers, Evergreen Marine Corp. rose 3.09 percent to close at NT$167.00, and rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. gained 3.75 percent and 4.51 percent, respectively, to end at NT$60.80 and NT$74.20.

In addition, China Airlines rose 4.64 percent to close at NT$22.55 and EVA Airways gained 3.80 percent to end at NT$34.15.

"With market emphasis back to fundamentals, investors had better keep a close eye on the current earnings season on the U.S. markets. This week, several tech heavyweights will report their results," Tsai said, referring to companies including Google's parent Alphabet and Microsoft.