Taiwan shares rally as TSMC closes above NT$1,000

Taipei, Oct. 7 (CNA) The benchmark Taiex rebounded from a downturn to rise almost 400 points Monday, boosted by a rally by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), dealers said.

Market sentiment improved as investors reacted to gains at the end of last week on markets in the United States, where better-than-expected nonfarm payroll data for September indicated that the U.S. economy remained resilient, dealers said.

The Taiex, the Taiwan Stock Exchange's weighted index, ended up 399.85 points, or 1.79 percent, at 22,702.56 after moving between 22,719.07 and 22,479.24, following a 0.39 percent decline on Friday. Turnover totaled NT$376.91 billion.

The market opened up 0.79 percent and momentum continued to be led by tech heavyweights, in particular TSMC, to vault the Taiex over the 22,700 point level by the end of the session.

That followed a 0.8 percent increase in the Dow Jones Industrial Average and a 1.2 percent rise in the tech heavy Nasdaq index on Friday, dealers said.

"The rally in U.S. markets largely reflected the strong jobs data for September, easing worries over a possible hard landing of the U.S. economy," Nan Hua Securities analyst Kevin Su said.

"It was no surprise that the Taiwan market followed suit, led by large tech stocks, to overcome the nearest technical resistance ahead of 22,700 points."

The U.S. jobs report Friday showed an increase of 254,000 jobs in September, well above a market estimate of 150,000, and the unemployment rate fell to 4.1 percent from 4.2 percent in August.

TSMC, the most heavily weighted stock on the Taiwan Stock Exchange, rose 2.87 percent to close at NT$1,005.00, the first time the stock ended at the NT$1,000 mark or above since Sept. 27.

TSMC's gains contributed about 225 points to the Taiex's rise and contributed to a 2.25 percent rise in the electronics index and 2.51 percent rise in the semiconductor sub-index.

"Buying in TSMC appeared strong as investors expected it will offer positive leads at its investor conference on Oct. 17," Su said. "After breaching NT$1,000, TSMC could continue moving higher ahead of the meeting."

Interest in TSMC spread to other semiconductor stocks. Smartphone IC designer MediaTek Inc. rose 1.63 percent to end at NT$1,250.00, and IC packaging and testing services provider ASE Technology Holding Co. closed 2.65 percent higher at NT$155.00.

Global Unichip Corp., TSMC's application-specific integrated circuit (ASIC) design subsidiary, finished 6.73 percent higher at NT$1,110.00.

Among TSMC's equipment suppliers, which were boosted by optimism over TSMC's outlook, Scientech Corp. surged 10 percent, the maximum daily increase, to close at NT$491.50.

On the over-the-counter market, Gudeng Precision Industrial Co., a photomask equipment supplier to TSMC, also rose 4.70 percent to end at NT$602.00.

"Optimism over artificial intelligence development also led to interest in TSMC, which supplies pure play wafer foundry services to Nvidia Corp., and related AI stocks throughout the session," Su said.

Second to TSMC in terms of market value, iPhone assembler Hon Hai Precision Industry Co., which rolls out AI servers, rose 1.80 percent to end at NT$197.50, and Quanta Computer Inc., another AI server supplier, gained 2.10 percent to close at NT$267.50.

AI graphics card vendor Giga-Byte Technology Co. closed 1.90 percent higher at NT$268.00.

With buying focusing on big tech stocks, the electronics sector accounted for about 62 percent of the market's total turnover Monday, while non-tech stocks appeared mixed throughout the session, Su said.

The petrochemical index lost 1.06 percent amid lingering concerns over a supply glut at a time when China is expanding production, Su said.

"A spike in international crude oil prices amid growing tensions in the Middle East has failed to ease such fears," he said.

Formosa Plastics Corp. fell 1.51 percent to close at NT$52.20, Nan Ya Plastics Corp. shed 1.41 percent to end at NT$45.45, and Formosa Chemicals & Fibre Corp. closed down 0.12 percent at NT$43.30.

Bucking the downturn, Formosa Petrochemical Corp. rose 0.92 percent to end at NT$55.00.

The electric machinery index rose 2.38 percent Monday, as the weakness of the Taiwan dollar relative to the U.S. dollar is expected to help electric machinery makers secure orders from foreign buyers, Su said.

Shihlin Electric & Engineering Corp. gained 2.07 percent to close at NT$222.50 and Chung-Hsin Electric & Machinery Manufacturing Corp. added 3.19 percent to end at NT$168.50.

Fortune Electric Co. rose 3.65 percent to close at NT$654.00, and Allis Electric Co. gained 3.77 percent to end at NT$124.00.

Late buying in large cap financial stocks pushed up the financial index by 1.22 percent.

Cathay Financial Holding Co. rose 3.03 percent to close at NT$68.00, CTBC Financial Holding Co. gained 1.90 percent to end at NT$34.90, and Fubon Financial Holding Co. closed up 1.11 percent at NT$91.10.

"With TSMC likely to trend higher and boost turnover to NT$400 billion or even higher, I expect the Taiex will be able to challenge the intraday high of 23,079 points recorded on Sept. 27," said Su, who recommended other tech stocks with relatively low valuations, such as Hon Hai and Quanta Computer.

According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$1.75 billion in shares on the market Monday.