Taiwan stock market up despite China military drills

Taipei, Oct. 14 (CNA) Shares closed higher on Monday despite Chinese military drills around Taiwan, dealers said.

Large-cap tech stocks appeared resilient amid optimism toward an investor conference scheduled by Taiwan Semiconductor Manufacturing Co. (TSMC) for Thursday, where the chipmaker could give positive leads in the current boom of an artificial intelligence era, dealers added.

The Taiex, the weighted index of the Taiwan Stock Exchange (TWSE), ended up 73.65 points, or 0.32 percent, at 22,975.29 after moving between 22,799.14 and 23,015.55. Turnover totaled NT$314.37 billion (US$9.78 billion).

The market opened up 0.20 percent but soon faced downward pressure, falling 102.50 points to the day's low in the early morning session in reaction to China's military drills, dealers said.

However, investors picked up electronics heavyweights such as TSMC and AI server maker Quanta Computer Inc., especially in the late trading session, helping the broader market recoup its earlier losses and return to positive territory by the end of the day's trading, dealers added.

"Judging from market movements today, the People's Liberation Army (PLA) military exercises only imposed a short-lived psychological impact on the local market since it is not the first military threat from China," MasterLink Securities analyst Tom Tang said.

"So, after the initial losses on the local main board, investors shifted their emphasis to the fundamentals," Tang said.

"TSMC will hold an investor conference on Thursday and the on-going AI boom has led many investors to stay upbeat about the chipmaker's outlook," he added.

TSMC, the most heavily-weighted stock in the local market, closed unchanged at NT$1,045.00 after coming off a low of NT$1,035.00. TSMC's recovery helped the Taiex offset its earlier downturn by about 80 points.

Speaking to reporters, Executive Yuan spokesperson Michelle Lee (李慧芝) said on Monday that Premier Cho Jung-tai (卓榮泰) has instructed all Cabinet agencies to pay close attention to any possible impact on the local stock market and foreign exchange markets, as well as cybersecurity and social order resulting from the Chinese military drills.

"My brokerage has forecast TSMC will post NT$41.6 in earnings per share (EPS) in 2024, and its EPS will rise to NT$50.81 in 2025," Tang explained.

"It is no surprise that the stock stayed resilient today and is expected to move even higher on its strong bottom line."

Among other semiconductor stocks, IC packaging and testing services provider ASE Technology Holding Inc. rose 1.94 percent to end at NT$158.00, while smartphone IC designer MediaTek Inc. closed down 0.77 percent at NT$1,290.00, off a low of NT$1,285.00.

With TSMC investing in silicon photonics development related to AI applications, silicon photonics concept stocks attracted strong buying with Elite Advanced Laser Corp. soaring 10 percent, the maximum daily increase, to end at NT$228.00, and PCL Technologies Inc. surging 9.09 percent to close at NT$126.00.

Among AI server makers, Quanta Computer rose 0.53 percent to end at NT$383.50, and rival Wistron Corp. gained 0.46 percent to close at NT$109.00. Second only to TSMC in terms of market value, iPhone assembler Hon Hai Precision Industry Co., which also rolls out AI servers, lost 0.50 percent to end at NT$199.00 but came off a low of NT$196.50.

"I suspect some buying came from government-led funds in a bid to bolster market confidence," Tang said. "But, the amount was estimated to be small as many investors were willing to keep stocks on hand to capitalize on the sound fundamentals."

Tang said the support from government-led funds was also seen among financial heavyweights, boosting the financial index by 0.24 percent.

Among the financial stocks that saw gains, CTBC Financial Holding Co. rose 1.28 percent to close at NT$35.60, Hua Nan Financial Holding Co. gained 1.18 percent to end at NT$25.65, and Mega Financial Holding Co. closed up 0.26 percent at NT$38.90.

However, Cathay Financial Holding Co. ended down 0.44 percent at NT$67.70.

In the old economy sector, certain large-cap stocks outperformed the broader market with food brand Uni-President Enterprises Corp. up 1.62 percent to close at NT$88.00 and textile maker Far Eastern New Century Corp. up 1.51 percent to end at NT$37.00.

In addition, Shihlin Electric & Engineering Corp. rose 7.59 percent to close at NT$222.50, and Fortune Electric Co. gained 2.33 percent to end at NT$615.00 on hopes that Taiwan Power Co.'s massive investment to improve power grid networks nationwide will boost their profitability.

"After TSMC's investor conference, tech giants on the U.S. markets will report their earnings and give guidance during the current earnings season. It deserves close attention," Tang said.

Despite the gains in the Taiex, foreign institutional investors sold a net NT$1.61 billion worth of shares on the main board on Monday, according to the TWSE.