Taiwan shares close slightly higher after rebound for U.S. markets

Taipei, July 29 (CNA) Shares in Taiwan closed slightly higher Monday after a technical rebound on the U.S. markets at the end of last week, dealers said.

The Taiex, the benchmark weighted index on the Taiwan Stock Exchange (TWSE), ended up 45.28 points, or 0.20 percent, at 22,164.49 after moving between 22,128.14 and 22,471.40. Turnover totaled NT$399.25 billion (US$12.15 billion), compared with NT$491.51 billion a session earlier.

The market opened up 0.91 percent and soon rose to the day's high, up more than 300 points in the early morning session, as buying was triggered by a 1.64 percent increase on the Dow Jones Industrial Average and a 1.03 percent rise on the tech-heavy Nasdaq index on Friday.

Technical analysis 

Dealers said the initial gains on the local main board came as the latest U.S. Personal Consumption Expenditures Price Index (PCE) rose 2.5 percent from a year earlier in June, moderating from 2.6 percent in May.

As the Taiex zipped past the 60-day moving average of 22,242 points and breached the 22,400 point mark, some investors shifted to the sell side, eroding the earlier upturn by the end of the session, dealers said.

"There seemed to be stiff technical resistance ahead of the 60-day moving average. Technically speaking, it was not easy to jump over those hurdles," Moore Securities Investment Consulting analyst Adam Lin said.

"After heavy losses in recent sessions on the local main board, many investors were reluctant to chase prices for the moment, which pushed down turnover today," Lin said.

Before Monday, the Taiex had lost 3.96 percent since the beginning of this month. However, it has soared more than 23 percent since the beginning of this year amid a frenzy over artificial intelligence (AI) development.

Tech stocks

"Fortunately, TSMC [contract chipmaker Taiwan Semiconductor Manufacturing Co.] stayed above the previous closing level and lent support to the broader market, offsetting the losses suffered by other tech heavyweights," Lin said.

TSMC, the most heavily weighted stock in the local market, rose 2.16 percent to close at NT$944.00, off a high of NT$948.00. Its gains contributed about 160 points to Taiex's rise and increased the electronics index and the semiconductor subindex by 0.31 percent and 1.23 percent, respectively.

Among other semiconductor stocks, IC packaging and testing services provider ASE Technology Holding Co. lost 1.29 percent to end at NT$153.50, and smartphone IC designer MediaTek Inc. closed down 0.40 percent at NT$1,240.00. In addition, Alchip Technologies Ltd., a major application-specific integrated circuit (ASIC) designer, shed 7.06 percent to end at NT$2,500.00.

Many AI-related stocks also came under pressure, with AI server maker Quanta Computer Inc. closing down 1.82 percent at NT$270.00 and rival Wistron Corp. dipping 2.06 percent to end at NT$95.00.

Giga-Byte Technology Co., a leading graphics card vendor for AI applications, also shed 5.54 percent to close at NT$256.00. However, iPhone assembler Hon Hai Precision Industry Co., -- second only to TSMC in terms of market value and which has also entered AI server production -- rose 0.52 percent to end at NT$193.00.

Financial, old economy sectors

"Another bright spot on the local main board today was that major financial stocks moved higher to lend additional support to the Taiex," Lin said. "I suspect the buying came from government-led funds in an attempt to vault the Taiex past the 60-day moving average."

The financial sector rose 1.24 percent, with Fubon Financial Holding Co. gaining 2.71 percent to close at NT$87.20, Cathay Financial Holding Co. up 1.95 percent to end at NT$62.70, and Mega Financial Holding Co. adding NT$1.41 percent to close at NT$43.30. Bucking the upturn, E. Sun Financial Holding Co. ended down 1.11 percent at NT$26.70.

Lin said old economy stocks mixed throughout the session.

In the electric machinery industry, which lost 4.85 percent, Shihlin Electric & Engineering Corp. fell 8.42 percent to close at NT$250.00, and Chung-Hsin Electric Machinery Manufacturing Corp. shed 8.71 percent to end at NT$194.00.

The construction industry rose 1.30 percent with King's Town Construction Co. soaring 10 percent, the maximum daily increase, to close at NT$93.20, and Highwealth Construction Corp. rising 2.27 percent to end at NT$63.00.

U.S. earnings season

As the earnings season in the U.S. is still underway, "several tech giants are expected to report their results and gave guidance later this week and that is worth watching as their reports could move the market," Lin said, referring to companies such as Microsoft, Mega, Amazon and Apple.

Despite the gains on the Taiex, foreign institutional investors sold a net NT$676 million worth of shares on the main board Monday, according to the TWSE.