Taiwan shares edge down despite late rally

Taipei, Nov. 11 (CNA) Shares in Taiwan closed slightly lower Monday despite a late rally in which Taiwan Semiconductor Manufacturing Co. (TSMC) recovered most of its early losses due to its sound fundamentals, dealers said.

The Taiex had strong technical support as it tested 23,363 points, the five-day moving average, and bounced back well above that level by the end of the trading session, dealers said.

The Taiwan Stock Exchange's benchmark weighted index ended down 24.25 points, or 0.10 percent, at 23,529.64 after moving between 23,306.66 and 23,563.80. Turnover totaled NT$355.57 billion (US$11.02 billion).

The market opened down 0.32 percent and dipped to the day's low just after 10 a.m. on weakness in semiconductors following a 0.82 percent decline in the Philadelphia Semiconductor Index on Friday, dealers said.

But TSMC then attracted bargain hunters as the stock tested its five day-moving average of NT$1,070.00, and other players, such as smartphone IC designer MediaTek Inc., stayed resilient, helping the broader market rebound to close above 23,500 points, dealers said.

TSMC closed 0.46 percent lower at NT$1,085.00 after hitting NT$1,070.00.

"Due to its heavy weighting, TSMC continued to dictate the local market's movement," Cathay Futures Consultant analyst Tsai Ming-han said. "When TSMC rebounded from its five-day moving average, the Taiex did so as well."

Tsai said TSMC's initial downturn reflected the weakness of semiconductor stocks at the end of last week and a report that the Department of Commerce sent a letter to TSMC ordering a halt of shipments of 7 nanometer chips or below to China.

"TSMC remains fundamentally healthy, so the earlier losses provided a good opportunity for bargain hunters to buy," Tsai said.

He was referring to the company's record high October sales of NT$314.24 billion, up 29.2 percent from a year earlier.

"To my knowledge, TSMC stopped selling chips made on the 7nm process to China before the report surfaced. The report only had a short-lived impact on TSMC's share price today," Tsai said.

With TSMC under pressure early, buying rotated to other semiconductor stocks, Tsai said.

MediaTek rose 1.17 percent to end at NT$1,295.00, and IC packaging and testing services provider ASE Technology Holding Co. gained 1.29 percent to close at NT$157.50.

Bucking the upturn, United Microelectronics Corp., a smaller contract chipmaker, ended down 0.21 percent at NT$46.55.

Buying also rotated to large cap tech stocks outside the semiconductor industry.

Hon Hai Precision Industry Co., which assembles iPhones and makes AI servers, rose 0.92 percent to close at NT$220.00, and power management solutions provider Delta Electronics Inc. added 0.25 percent to end at NT$401.00.

But AI server supplier Quanta Computer Inc. lost 0.91 percent to close at NT$325.00, and rival Wistron Corp. also fell 1.21 percent to end at NT$122.00.

The old economy sector appeared mixed, though the construction and transportation sectors outperformed the broader market, gaining 2.08 percent and 1.13 percent, respectively.

"I think the gains in the construction industry were technical in nature after recent heavy losses," Tsai said.

"It remains weakened by the central bank's latest round of selective credit controls on the residential housing market (in mid-September)."

King's Town Construction Co. rose 5.96 percent to close at NT$80.00, Huaku Development Co. rose 4.76 percent to end at NT$121.00, Kindom Development Co. added 4.23 percent to close at NT$51.70, and Highwealth Construction Corp. ended up 3.50 percent at NT$42.90.

In the transportation sector, which rose 1.13 percent, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, rose 1.15 percent to close at NT$220.50, and Wan Hai Lines Ltd. gained 0.64 percent to end at NT$23.40.

"I prefer airline stocks over shipping stocks as demand for air cargo services has been on the rise to ship tech gadgets, including chips," Tsai said.

He was referring to EVA Airways, which rose 2.21 percent to close at NT$39.25, and China Airlines, which gained 1.08 percent to end at NT$23.40.

Elsewhere in the old economy sector, textile brand Far Eastern New Century Corp. lost 2.74 percent to close at NT$25.45, while Makalot Industrial Co., another textile maker, rose 1.33 percent to end at NT$244.00.

In the financial sector, which lost 0.22 percent, Fubon Financial Holding Co. lost 1.29 percent to close at NT$91.70, and Cathay Financial Holding Co. shed 1.15 percent to end at NT$68.70.

"As long as TSMC continues to ride its sound fundamentals, the Taiex could challenge its historical intraday high of 24,416 points seen on July 11," Tsai said.

According to the Taiwan Stock Exchange, foreign institutional investors sold a net NT$172 million in shares on the market Monday.