Taiwan shares end slightly down as TSMC recoups majority of losses

Taipei, Nov. 1 (CNA) Shares in Taiwan closed slightly lower Friday as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) recouped most of its earlier heavy losses caused by a plunge by IC stocks on the U.S. markets at the end of last week and with buying from government-led funds said to stand behind the recovery, dealers said.

Amid concerns over volatility among tech stocks on the U.S. markets, sentiment on the local main board remained cautious as many investors remained jittery about the U.S. presidential vote on Nov. 5, dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 40.35 points, or 0.18 percent, at 22,780.08 after moving between 22,231.94 and 22,828.98. Turnover totaled NT$410.58 billion (US$12.84 billion).

The market opened down 1.67 percent and selling escalated to plunge the Taiex to the day's low by 588.49 points, or 2.58 percent, in the first few minutes of the session with TSMC in focus, as a sell-off was sparked by a 2.76 percent decline on the tech-heavy Nasdaq index and a 4.01 percent tumble on the Philadelphia Semiconductor Index, dealers said.

But as the Taiex breached the important technical support of the 120-day moving average of 22,280 points, bargain hunters emerged to take advantage of the initial downturn, with their buying largely targeting TSMC.

This helped the broader market climb from the bottom of the session by recovering more than 500 points by the end of the session, dealers added.

"Friday's initial downturn paved the way for bargain hunters to jump into the market," Mega International Investment Services Corp. analyst Alex Huang said.

"Buying TSMC was the most effective way to bolster the broader market and I suspect government-led funds were part of these bargain hunters to reinforce investors' confidence," he said.

"TSMC was able to stand above the NT$1,000 mark so that the Taiex could return to the 120-day moving average to turn healthier technically," Huang said. "The main board moved in line with TSMC throughout the session."

TSMC, the most heavily weighted stock in the local market, fell only 0.49 percent to close at NT$1,025.00 after coming off a low of NT$996.00.

TSMC's recovery helped the broader market offset about 270 points in losses in the Taiex, while the electronics index ended down 0.36 percent at 1,240.34 points, off a low of 1,207.01.

Other major semiconductor stocks also returned from their lows on bargain hunting with smartphone IC designer MediaTek Inc. ending unchanged at NT$1,290.00 after hitting a low of NT$1,220.00.

"The earlier losses on the local tech sector largely reflected volatility among tech stocks on the U.S. markets amid concerns over massive investments in artificial intelligence development which has not delivered satisfactory earnings. Investors need real numbers to justify their stock purchases," Huang said.

He was referring to companies like Meta, which dropped more than 4 percent on Friday as its earnings failed to meet market expectations and announced its artificial intelligence (AI) investments will grow sharply in 2025.

However, select Taiwan's AI-related stocks appeared resilient with AI server maker Quanta Computer Inc. up 0.49 percent to close at NT$305.00, and rival Wistron Corp. up 3.60 percent to end at NT$115.00.

Second to TSMC in terms of market value, iPhone assembler Hon Hai Precision Industry Co., which also rolls out AI servers, fell 1.65 percent to close at NT$208.00, however.

"When many investors dumped TSMC during the session, they sought targets in the old economy sector, where many stocks lagged behind their tech counterparts," Huang said. "The construction industry was part of them but the gains were technical in nature."

After coming under heavy losses in recent sessions after the central bank launched the seventh round of credit controls in mid-September to rein in home prices, the construction index rose 2.92 percent on Friday.

Among the gaining construction stocks, Huang Hsiang Construction Corp. rose 6.62 percent to close at NT$61.20, and Cathay Real Estate Development Co. gained 6.19 percent to end at NT$25.75.

In addition, King's Town Construction Co. soared 10 percent, the maximum daily increase, to close at NT$82.70, and Kindom Development Co. ended up 3.86 percent at NT$47.10.

Elsewhere in the old economy sector, Shihlin Electric & Engineering Corp. gained 0.73 percent to close at NT$206.00, and Chung-Hsin Electric & Machinery Manufacturing Corp. added 0.63 percent to end at NT$60.50.

In the financial sector, which fell 0.65 percent, Fubon Financial Holding Co. and Cathay Financial Holding Co. dropped 0.44 percent to close at NT$90.40 and NT$68.60, respectively.

Meanwhile, E. Sun Financial Holding Co. lost 2.01 percent to end at NT$26.85, and CTBC Financial Holding Co. closed down 0.56 percent at NT$35.70.

"The local main board faced higher hurdles ahead of the U.S. presidential vote," Huang said. "Investors have feared that if Donald Trump wins the election, he will scrap a deal on (US$6.6 billion) subsidies to be granted to TSMC for its massive investments in Arizona."

Trump has said Taiwan "stole" the semiconductor industry from the U.S., and as Taiwan is "immensely wealthy" the U.S. should not be giving it "billions of dollars to build chips."

While the Taiex trimmed most of its earlier losses, foreign institutional investors still stood on the sell side, registering a net sell of NT$21.34 billion worth of shares on the main board Friday, according to the TWSE.