Taiwan shares in mild rebound, TSMC muted ahead of results

Taipei, Oct. 17 (CNA) Shares in Taiwan staged a mild technical rebound Thursday from a slump a session earlier with investors encouraged by a rally on U.S. markets overnight in the wake of positive earnings reports, dealers said.

However, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) lagged behind the broader market, capping the gains on the local main board amid caution ahead of an investor conference scheduled to start after the market closed, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 42.86 points, or 0.19 percent, at 23,053.84 after moving between 22,950.70 and 23,191.79, following a 1.21 percent decline a session earlier. Turnover totaled NT$372.08 billion (US$11.56 billion) on Thursday.

The market opened up 0.45 percent in a knee jerk reaction to a 0.79 percent increase on the Dow Jones Industrial Average and a 0.21 percent rise on the tech heavy Nasdaq index overnight and moved around Wednesday's closing level for most of the morning session, dealers said.

Momentum accelerated in the afternoon session with artificial intelligence-related stocks bouncing back from Wednesday following the weaker-than-expected sales forecast given by Netherlands-based semiconductor equipment supplier ASML Holding NV. However, TSMC still incurred losses, limiting the upturn on the Taiex before the investor conference, dealers said.

The technical rebound helped the Taiex to stay above the nearest technical resistance around the five-day moving average of 23,046 points by the end of the session.

"After (U.S.-based) AI chip designer Nvidia Corp. staged a rebound overnight from the ASML shock, many local AI-related stocks followed suit today," Cathay Futures Consultant analyst Tsai Ming-yen said. "But, TSMC being stuck in the doldrums prevented the broader market from moving higher."

"While many investors remained upbeat about AI development, they just wanted to see the real numbers for TSMC's third quarter results and its guidance for the fourth quarter, 2024 as a whole and even 2025 after ASML's disappointing forecast," Tsai said.

TSMC, the most heavily weighted stock on the local market, fell 0.96 percent to close at NT$1,035.00. The chipmaker's losses offset the Taiex's gains by about 80 points, and sent the electronics index and semiconductor sub-index lower by 0.14 percent and 0.72 percent, respectively.

After the market closed, TSMC reported its net profit hit a new high of NT$325.2 billion in the July-September period, up 31.2 percent from a quarter earlier and also up 54.2 percent from a year earlier.

Other semiconductor stocks largely appeared mixed with dynamic random access memory (DRAM) chip maker Nanya Technology Corp. rising 3.87 percent to close at NT$44.30, while United Microelectronics Corp., a smaller contract chipmaker, ended unchanged at NT$51.70.

Encouraged by a higher Nvidia, iPhone assembler Hon Hai Precision Industry Co., which also rolls out AI servers, rose 1.71 percent to close at NT$208.50, and AI server supplier Quanta Computer Inc. added 1.86 percent to end at NT$300.50.

Meanwhile, Wistron Corp., another AI supplier, gained 1 percent to close at NT$110.50, and its cloud enabled service subsidiary Wiwynn Corp. rose 1.04 percent to end at NT$1,950.00.

After Nvidia CEO Jensen Huang touted the development of humanoid robotics in an interview with CNBC overnight, Tsai said Taiwan-based AI robot concept stocks attracted strong buying throughout the session on Thursday.

Among them, shares in control component supplier Hiwin Mikrosystem Corp. soared 10 percent, the maximum daily increase, to close at NT$123.50, and machinery maker Ying Han Technology Co. also surged 10 percent to end at NT$71.80.

"When investors cut their holdings in TSMC, buying rotated to select old economy stocks, and today, rotational interest focused on some raw materials stocks such as the petrochemical industry," Tsai said. "But, I have to say they remained haunted by concerns over weak demand in China as Chinese authorities' recent economic stimulus measures need time to yield results."

The petrochemical industry rose 1.07 percent with Formosa Chemicals & Fiber Corp. gaining 3.33 percent to close at NT$40.30. Formosa Petrochemical Corp. gained 1.85 percent to end at NT$49.65, Nan Ya Plastics Corp. added 1.54 percent to close at NT$42.90, and Formosa Plastics Corp. ended up 0.94 percent at NT$48.40.

In the steel industry, which rose 1.62 percent, China Steel Corp., the largest steel maker in Taiwan, rose 1.35 percent to close at NT$22.45, and Chung Hung Steel Corp. gained 4.39 percent to end at NT$21.40.

With international crude oil prices holding near a two-week low, Evergreen Marine Corp. rose 3.69 percent to close at NT$196.50, and rival Yang Ming Marine Transport Corp. gained 2.83 percent to end at NT$65.50.

In the financial sector, which rose 0.86 percent, Fubon Financial Holding Co. added 1.44 percent to close at NT$91.60, and Cathay Financial Holding Co. ended up 1.18 percent at NT$68.60.

"Investors should keep a close eye on the reaction of U.S. markets tonight to what TSMC said at the investor conference, which is expected to move the Taipei market tomorrow," Tsai said.

Despite the gains in the Taiex, foreign institutional investors sold a net NT$4.74 billion worth of shares on the main board Thursday.