Taiwan shares post largest ever closing gains as TSMC steams ahead

Taipei, Aug. 7 (CNA) Shares in Taiwan scored the largest closing gains in history, with the benchmark Taiex surging almost 800 points Wednesday, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) in the wake of a spike in the stock's American depositary receipts overnight, at a time when U.S. markets staged a rebound, dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 794.26 points, or 3.87 percent at 21,295.28 after moving between 20,638.28 and 21,306.23. Turnover totaled NT$443.32 billion (US$13.56 billion).

The market opened up 0.65 percent and that momentum continued with the bellwether electronics sector in focus, helping the Taiex initially jump over high hurdles ahead of the 21,000 point mark, with buying sparked by a 0.76 percent increase on the Dow Jones Industrial Average and a 1.03 percent rise on the tech-heavy Nasdaq index overnight, dealers said.

TSMC's buying was seen among tech heavyweights and spread to non-tech industries throughout the session, pushing the broader market up closer to the 21,300 point mark by the end of the session, dealers added.

"Judging by the movement of the Taiex, I think many investors felt relieved to some extent after a comeback on U.S. markets," Cathay Futures Consultant analyst Tsai Ming-han said, referring to the rebound by the Dow and Nasdaq from a fall of 2.6 percent and 3.4 percent, respectively, on Monday.

"It seemed that investors' appetite to take risks grew as they scrambled to pick up bargains among tech heavyweights which had been hit hard in recent sessions," Tsai said.

Amid volatility on the U.S. markets caused by growing worries over a recession in the United States, the local main board tumbled 2,811.22 points, or 12.42 percent, on Friday and Monday before bouncing back 3.38 percent on Tuesday.

"TSMC, again, served as an anchor, driving the Taiex higher as investors took their cues from a 5.03 percent rise in its ADRs overnight," Tsai said.

TSMC, the most heavily weighted stock on the local market, rose 4.55 percent to close at NT$920.00. TSMC's gains contributed about 325 points to the Taiex's rise and sent the electronics index higher by 4.41 percent.

Dealers said the buying enjoyed by TSMC reflected optimism over its operations as the chipmaker has forecast sales will grow 24-26 percent in 2024 in U.S. dollar terms, an upgrade from an earlier estimate of 21-26 percent on the back of strong demand for its advanced 3 nanometer and 5nm processes in the artificial intelligence era.

Among other large cap semiconductor stocks, smartphone IC designer MediaTek Inc. gained 6.98 percent to end at NT$1,150.00, and IC packaging and testing services provider ASE Technology Holding Co. rose 5.82 percent to close at NT$145.50.

More significantly, United Microelectronics Inc., a smaller contract chip maker, soared 10 percent, the maximum daily increase, to end at NT$53.00, and application-specific integrated circuit (ASIC) designer Alchip Technologies, Ltd. also surged 10 percent to close at NT$2,175.00.

Also in the tech sector, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, recovered from its recent weakness, rebounding by 1.79 percent to end at NT$170.50.

Although U.S.-based AI server maker Super Micro Computer reported lower than expected results for its fiscal fourth quarter, Taiwan AI server maker Wistron Corp. jumped 10 percent to close at NT$97.50, and its bigger rival Quanta Computer Inc. gained 1.21 percent to end at NT$250.00.

"Sentiment among investors in Taiwan improved today due to the latest rally on the U.S. market so it was no surprise that industries outside the tech sector attracted bargain hunters throughout the session," Tsai said.

The electric machinery industry rose 5.94 percent with Chung-Hsin Electric & Machinery Manufacturing Corp. up 8.06 percent to close at NT$167.50, and Shihlin Electric & Engineering Corp. up 4.31 percent to end at NT$218.00.

In the transportation industry, which gained 4.99 percent, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, rose 6.95 percent to close at 177.00, and rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. gained 4.09 percent and 5.78 percent, respectively, to end at NT$63.60 and NT$84.20.

Elsewhere in the old economy sector, Eclat Textile Co. rose 4.55 percent to close at NT$506.00, while Formosa Petrochemical Corp. bucked the upturn, falling 1.54 percent to end at NT$64.00.

In the financial sector, which rose 1.82 percent, Cathay Financial Holding Co. rose 4.46 percent to close at NT$58.60, and Fubon Financial Holding Co. added 2.35 percent to end at NT$82.60. However, Mega Financial Holding Co. closed down 0.60 percent at NT$41.55.

"With the Taiex breaching 21,000 points, the main board has become technical healthier," Tsai said. "But, how far the current momentum will go depends on the performance of U.S. markets, which will be dictated by more data down the road and whether the U.S. economy encounters a recession or not."

Despite the gains on the Taiex, foreign institutional investors sold a net NT$7.80 billion worth of shares on the main board Wednesday, according to the TWSE.