Taiwan shares make strong comeback on TSMC rally

Taipei, Aug. 9 (CNA) Shares in Taiwan staged a technical rebound Friday after slumping a day earlier, helped by solid gains in American markets overnight, dealers said.

Market sentiment improved as investors were relieved by lower-than-expected weekly jobless claims in the United States, but the upturn on Taiwan's market was capped at around the 21,600-point mark, dealers said.

The Taiex, the Taiwan Stock Exchange's benchmark weighted index, ended up 598.90 points, or 2.87 percent, at 21,469.00 after moving between 21,212.00 and 21,613.76. Turnover totaled NT$455.828 billion (US$14.09 billion).

The market opened up 1.64 percent with large cap electronics, in particular Taiwan Semiconductor Manufacturing Co. (TSMC), leading the way, after a 1.76 percent increase on the Dow Jones Industrial Average and a 2.87 percent rise on the tech-heavy Nasdaq index overnight.

The rally on the U.S. markets came after the latest weekly jobless claims there fell to 233,000, lower than the 240,000 forecast, which eased concerns over a recession in the United States.

Those concerns had been triggered by the latest nonfarm payroll report on Aug. 2, which reported a rise in the unemployment rate in the U.S. in July to 4.3 percent, up from 4.1 percent in June, the highest level since October 2021.

Led by TSMC, the most heavily weighted stock on the market, buying momentum continued Friday and spread to old economy and financial stocks to push the Taiex above 21,600 points before some investors moved to the sell side, capping the market's rise, dealers said.

For the volatile week, the Taiex lost 169.09 points, or 0.78 percent. On Monday, it took its biggest plunge in history, falling 1,807.21 points amid fears over a possible recession in the United States.

"The latest weekly jobless claims in the U.S. led many investors to become more upbeat about the U.S. economy, leaving previous caution behind," Taishin Securities Investment Advisory analyst Tony Huang said.

"It seemed the appetite of many investors to take risks recovered and they appeared more willing to pick up large cap electronics stocks, which had been hammered in recent sessions and seemed more affordable. TSMC was their top choice," Huang said

Helped by a 6.13 percent hike in TSMC's American depositary receipts (ADRs) overnight, TSMC rose 4.14 percent to close at the day's high of NT$934.00.

The stock's gains contributed about 310 points to the Taiex's rise and helped push up the electronics index and semiconductor sub-index by 3.24 percent and 3.85 percent, respectively.

After the market closed, TSMC reported a new high for monthly consolidated sales of NT$256.95 billion in July, up 23.6 percent from a month earlier and up 44.7 percent from a year earlier.

Among other tech heavyweights, iPhone assembler Hon Hai Precision Industry Co., also known as Foxconn globally, gained 3.06 percent to end at NT$168.50. Hon Hai is second to TSMC in terms of market value.

TSMC's buying spread to other big semiconductor stocks. IC packaging and testing services provider ASE Technology Holding Co. closed 5.43 percent higher at NT$145.50, and United Microelectronics Corp., a smaller contract chipmaker, rose 2.08 percent to end at NT$53.90.

Underperforming the broader market, smartphone IC designer MediaTek Inc. closed up only 0.90 percent at NT$1,125.00 after hitting a high of NT$1,155.00 as investors decided it was time to lock in profits built in recent weeks.

Also in the electronics sector, power management solution provider Delta Electronics Inc. rose 2.79 percent to close at NT$387.50, and Yageo Corp., the world's third largest multi-layer ceramic capacitor (MLCC) supplier, gained 3.71 percent to end at NT$727.00.

Artificial intelligence-related stocks moved in line with the tech sector. AI server supplier Quanta Computer Inc. rose 4.17 percent to close at NT$250.00, and Giga-Byte Technology Co., a leading graphics card vendor for AI applications, closed up 4.28 percent at NT$231.50.

"Today's gains came due to technical factors after recent heavy losses so tech stocks were not the only beneficiaries. The old economy and financial sectors also rode the wave," Huang said.

In the construction industry, which rose 2.43 percent as many developers are expected to book large sales in the second half of this year, King's Town Construction Co. rose 5.88 percent to close at NT$108.00.

Also, JSL Construction & Development Co. gained 5.26 percent to end at NT$180.00, and Goldsun Building Materials Co. added 4.72 percent to close at NT$49.95.

The electric machinery industry rose 4.19 percent on hopes that many companies in the industry will get a boost in sales from the government's massive investment in upgrading Taiwan's electricity grid, dealers said.

Chung-Hsin Electric & Machinery Manufacturing Corp. soared 10 percent, the maximum daily increase, to end at NT$177.50, Shihlin Electric & Engineering Corp. gained 6.88 percent to close at NT$217.50, and Fortune Electric Co. ended up 5.96 percent at NT$124.50.

In the financial sector, which rose 2.75 percent, Cathay Financial Holding Co. gained 4.67 percent to close at NT$60.50 and Fubon Financial Holding Co. rose 3.49 percent to end at NT$86.00.

"The Taiex still needs some time to consolidate before jumping over the 21,600-point hurdle," Huang said. "In addition, the ongoing earnings season in Taiwan and in the U.S. could continue to move share prices."

According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$25.46 billion in shares Friday.