Taiex's gains capped with TSMC in consolidation

Taipei, Oct. 21 (CNA) Shares in Taiwan saw initial gains limited and closed slightly higher Monday as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) fell into consolidation mode after rallying at the end of last week, dealers said.

Buying rotated to other tech heavyweights such as iPhone assembler Hon Hai Precision Industry Co., and shipping stocks also attracted interest, helping the broader market offset losses suffered by the financial sector and end above the previous closing level, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 55.26 points, or 0.24 percent, at 23,542.53 after moving between 23,480.06 and 23,678.51. Turnover totaled NT$352.18 billion (US$11.01 billion).

The market opened up 0.49 percent and rose to the day's high, up about 136 points in the early morning session on follow-up buying from a session earlier, when the Taiex soared 433.43 points or 1.88 percent, as the bellwether electronics sector continued to lead the broader market higher, dealers said.

However, with the Taiex moving closer to the nearest technical resistance ahead of 23,700 points, some investors shifted to the sell side, locking in their profits built for TSMC, which surged 4.83 percent on Friday after the company revised its 2024 sales growth forecast upwards almost 30 percent in U.S. dollar terms at an investor conference Thursday, dealers added.

With TSMC taking a pause, the Taiex came off an earlier high and saw its initial gains capped by the end of the session, dealers said.

TSMC, the most heavily weighted stock on the local market, closed unchanged at NT$1,085.00 after hitting an intraday high of NT$1,095.00.

"Friday's strong showing indicated the positive leads given by the company at the investor conference were largely priced in," Hua Nan Securities analyst Kevin Su said. "The NT$1,100 mark, the intraday high on Friday, has become a near-term technical ceiling for the stock."

Fortunately, the local main board still benefited from rotational buying as investors looked for other tech heavyweights to park their money, Su said.

"As the Taiwan dollar appreciated against the U.S. dollar, foreign funds flowed into the local market to boost liquidity and facilitate rotational buying," he added.

"Today, Hon Hai was among the tech stocks to play catch up with TSMC amid ample liquidity," Su said. "In addition, (smartphone IC designer) MediaTek Inc. also rode the waves of bargain hunting in the wake of its relatively low valuation."

Second to TSMC in terms of market value, Hon Hai, which also rolls out artificial intelligence servers, gained 1.20 percent to end at NT$210.00, and MediaTek, No. 3 in market capitalization, rose 1.92 percent to close at NT$1,330.00.

"Hon Hai's gains also reflected optimism over the outlook for AI servers with shipments of GB200 AI servers powered by Nvidia Corp.'s Blackwell graphics processing units set to start in the fourth quarter," Su said.

Among other AI-related stocks, AI server maker Quanta Computer Inc. rose 0.65 percent to end at NT$309.00 and rival Wistron Corp. gained 1.38 percent to close at NT$110.50. In addition, Wistron's cloud-enabled service subsidiary Wiwynn Corp. also grew 2.07 percent to end at NT$1,975.00.

"The resilient transportation industry also served as an anchor to stabilize the Taiex on the back of port congestion on the U.S. west coast, while many other raw material stocks in the old economy sector came under pressure amid concerns over weak demand from China," Su said.

With the transportation index up 2.16 percent, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, rose 3.82 percent to close at NT$204.00, and rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. were up 3.79 percent and 3.05 percent, respectively, to end at NT$68.40 and NT$87.90.

Bucking the upturn, the petrochemical industry lost 0.64 percent with Formosa Plastics Corp. down 1.87 percent to close at NT$47.30 and Nan Ya Plastics Corp. down 3.24 percent to end at NT$41.85. In addition, Formosa Chemicals & Fiber Corp. shed 2.99 percent to close at NT$38.90, and Formosa Petrochemical Corp. ended down 2.18 percent at NT$49.30.

Elsewhere in the old economy sector, textile brand Far Eastern New Century Corp. dropped 0.67 percent to close at NT$36.85 and Eclat Textile Co. fell 0.54 percent to end at NT$555.00.

The financial sector suffered heavy selling, down 1.66 percent. as investors took profits from gains posted on Friday. Fubon Financial Holding Co. shed 2.47 percent to close at NT$90.90, Cathay Financial Holding Co. lost 2.15 percent to end at NT$68.30 and CTBC Financial Holding Co. lost 1.27 percent to close at NT$27.25, Su added.

"Before the U.S. presidential election (on Nov. 5), I expect investors at home and abroad to remain cautious and the Taiex could continue to move in a narrow range," Su said.

According to the TWSE, foreign institutional investors bought a net NT$21.17 billion worth of shares on the main board Monday, when the U.S. dollar ended down NT$0.098 at NT$31.985 against the Taiwan dollar.