Taiwan shares rebound almost 700 points, led by tech sector

Taipei, Aug. 6 (CNA) Shares in Taiwan experienced a technical rebound Tuesday, surging nearly 700 points, following the weakness in the last two sessions caused by volatility in the U.S. markets, dealers said.

The buying was largely concentrated on select large-cap tech stocks, dealers added.

The gains, however, were capped as the local main board faced stiff technical resistance ahead of 21,000 points as the benchmark index moved closer to that level during the rebound, dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 670.14 points, or 3.38 percent, at 20,501.02 after moving between 19,662.74 and 20,751.50. Turnover totaled NT$639.905 billion (US$19.56 billion).

The main board tumbled 2,811.22 points, or 12.42 percent, in the previous two sessions, due to the U.S. markets falling amid rising concerns over the country's economy following the reporting of disappointing manufacturing activity and job data for June.

On Tuesday, the local market opened up 2.59 percent due to a technical comeback. The momentum continued until selling plunged the Taiex to negative territory at one point in the early morning session.

But, buying soon remerged, led by large-cap tech stocks, particularly contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and smartphone IC designer MediaTek Inc., pushing the main board back to positive territory. It increased by 920 points before coming off the day's high by the end of the session.

"Panic selling prompted many investors to dump their holdings, especially on Monday, which sent many tech heavyweights including TSMC and MediaTek into a tailspin," Mega International Investment Services Corp. analyst Alex Huang said.

"Today, bargain hunters picked up stocks with sound fundamentals, which served as a driver to the rebound," Huang said.

"Investors were also betting on a rebound of U.S. tech stocks on Tuesday," Huang added.

TSMC, the most heavily weighted stock in the local market, rose 7.98 percent to close at NT$868.00, off a high of NT$895.00.

TSMC's gains contributed almost 530 points to the Taiex rise, pushing the electronics index and semiconductor sub-index up by 4.64 percent and 6.84 percent.

MediaTek gained 8.48 percent to end at NT$1,075.00 after soaring 10 percent, the maximum daily increase, to hit a high of NT$1,090.00. The stock had slid more than 16 percent in the previous two sessions.

"Despite the rebound, the gains were limited. But this is unsurprising as the main board needs more time to digest the pressure before it challenges the 21,000-point level," Huang said.

"TSMC faces high technical hurdles ahead of NT$903.00, the intraday low seen on Friday," Huang added.

Huang said select highly-priced semiconductor stocks still experienced selling throughout the session.

Among them, application-specific integrated circuit (ASIC) designer Alchip Technologies, Ltd. lost 5.94 percent to close at NT$1,980.00 and Global Unichip Corp., TSMC's ASIC design subsidiary, fell 1.26 percent to end at NT$942.00.

Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, lost 0.30 percent to close at NT$167.50, and flat panel makers AUO Corp. and Innolux Corp. shed 3.39 percent and 1.09 percent, respectively, to end at NT$14.75 and NT$13.65.

Huang said that old economy and financial stocks also made a comeback in line with the broader market.

"Amid escalating tensions in the Middle East, petrochemical stocks moved higher on rising crude prices, while shipping stocks also rode the waves of rising freight rates," Huang said.

The petrochemical index rose 1.54 percent after crude prices rebounded 1 percent Tuesday morning, with Formosa Petrochemical Corp. up 4.50 percent to close at NT$65.00, and Formosa Chemicals & Fibre Corp. up 3.04 percent to end at NT$47.40.

In addition, Nan Ya Plastics Corp. added 1.85 percent to close at NT$46.80, and Formosa Plastics Corp. ended up 0.73 percent to end at NT$55.20.

In the transportation industry, which rose 2.41 percent, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, gained 3.12 percent to close at NT$165.50, and rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. rose 1.83 percent and 6.13 percent, respectively, to end at NT$61.10 and NT$79.60.

The financial sector rose 1.60 percent with Fubon Financial Holding Co. up 2.15 percent to close at NT$80.70, and CTBC Financial Holding Co. up 2.02 percent to end at NT$32.90. In addition, Cathay Financial Holding Co. closed up 0.90 percent at NT$56.10.

U.S.-based artificial intelligence server maker Super Micro Computer Inc. (Supermicro) is scheduled to release its fiscal fourth-quarter results on Tuesday U.S. time.

"It is worth watching how the U.S. markets will react to Supermicro's guidance after media reports revealed (AI chip designer) Nvidia's delay of AI chip shipments," Huang said. "The movement of Supermicro shares is expected to dictate AI-related stocks in Taiwan."

Tech website The Information said Nvidia told customers that the roll-out of its Blackwell graphics processing units will be delayed by three months or longer due to unexpected design flaws.

According to the TWSE, foreign institutional investors bought a net NT$24.39 billion of shares on the main board Tuesday.