Taiwan shares soar to end above 23,200 points after U.S. rally

Taipei, Oct. 15 (CNA) Shares in Taiwan surged more than 300 points Tuesday, with buying sparked by a rally on U.S. markets overnight, dealers said.

The bellwether electronics sector led the gains with artificial intelligence related stocks in focus as investors took their cue from robust AI chip designer Nvidia Corp. Monday to pick up large cap stocks, including contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), to vault the main board over the 23,200 point mark, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 316.75 points, or 1.38 percent, at 23,292.04 after moving between 23,082.06 and 23,353.91. Turnover totaled NT$410.35 billion (US$12.75 billion).

The market opened up 0.47 points with the Taiex overcoming the nearest technical resistance ahead of 23,000 points, in the wake of new record highs on the Dow Jones Industrial Average and the S&P 500 index overnight, dealers said.

Momentum on the local main board continued as buying in tech heavyweights related to AI development accelerated with investors encouraged by a 2.43 percent spike in Nvidia shares overnight, moving the Taiex to almost the day's high just under 23,300 points, dealers added.

"Today's buying largely reflected optimism toward AI development, in particular Nvidia shares continued moving higher," Mega International Investment Services Corp. Alex Huang said. "With big AI stocks on the rise, it was no surprise that turnover expanded, prompting the Taiex to jump more than 300 points led by TSMC."

TSMC, the most heavily weighted stock on the local market, rose 2.39 percent to close at NT$1,070.00. TSMC's gains contributed about 200 points to the Taiex's rise and sent the electronics index and semiconductor sub-index higher by 1.89 percent and 2.09 percent, respectively.

"Many investors have embraced high hopes that TSMC will report good results for the third quarter and give impressive guidance for the fourth quarter and the whole of 2024 at an investor conference slated for Thursday, due to the AI boom," Huang said. "It is possible TSMC will soon challenge NT$1,080.00, a closing high seen July 11."

Nvidia's upturn also led investors to buy into other AI related stocks throughout the session, Huang said.

Second to TSMC in terms of market value, iPhone assembler Hon Hai Precision Industry Co., which also rolls out AI servers, gained 4.02 percent to end at NT$207.00, and AI server supplier Quanta Computer Inc. added 4.23 percent to close at NT$295.50.

AI PC brands Asustek Computer Inc. and Acer Inc. added 2.74 percent and 1.22 percent, respectively, to end at NT$599.00 and NT$41.55, and AI graphics card vendor Giga-Byte Technology Co. gained 1.51 percent to close at NT$268.50.

Also in the electronics sector, IC packaging and testing services provider ASE Technology Holding Co. rose 6.65 percent to end at NT$168.50.

"The financial sector also attracted solid buying which added momentum to the Taiex, with investors impressed by its improving bottom line," Huang said. "Due to the increase in profit, these financial firms could be generous and issue more cash dividends."

In the first nine months of this year, the 14 financial holding firms whose shares are traded on the main board posted NT$500.97 billion in combined net profit, soaring 47.59 percent from a year earlier.

With the financial index rising 1.33 percent, Cathay Financial Holding Co. rose 1.62 percent to close at NT$68.80, and Fubon Financial Holding Co. gained 1.55 percent to end at NT$91.90. In addition, CTBC Financial Holding Co. added 2.11 percent to close at NT$36.35, and E. Sun Financial Holding Co. ended up 1.24 percent at NT$28.65.

"However, old economy stocks largely lagged behind their tech counterparts as raw material suppliers were haunted by weak demand from China," Huang said.

The petrochemical index lost 1.01 percent after international crude oil prices fell about 2 percent overnight after OPEC downgraded its outlook for 2024 and 2025 global oil demand growth on declining demand from China.

Formosa Plastics Corp. lost 3.30 percent to close at NT$48.35, and Formosa Petrochemical Corp. shed 2.94 percent to end at NT$49.50. Meanwhile, Taita Chemical Co. fell 3.16 percent to close at NT$18.40, and Nan Ya Plastics Corp. ended down 1.04 percent at NT$42.65.

Among crude oil price-sensitive textile stocks, Far Eastern New Century Corp. lost 1.49 percent to close at NT$36.45, and Eclat Textile Co. fell 1.61 percent to end at NT$550.00.

Elsewhere in the old economy sector, Chung Hung Steel Corp. shed 1.21 percent to close at NT$20.35, while China Steel Corp., the largest steel supplier in Taiwan, ended unchanged at NT$22.35.

"After the Taiex passed 23,000 points, I expect the main board to soon challenge the historical intraday high of 23,650 points seen on July 17 as TSMC keeps moving ahead," Huang said. "However, investors should remain alert over possible volatility on Wednesday, when October futures contracts will be settled, as foreign institutional investors still own a large amount of short position contracts."

According to the TWSE, foreign institutional investors bought a net NT$33.43 billion worth of shares on the main board Tuesday.