Taiwan shares see earlier gains eroded before MSCI index changes

Taipei, Nov. 25 (CNA) Shares in Taiwan gave up most of their initial gains to end slightly up Monday with expanded turnover before regular index adjustments by MSCI Inc. took effect after the market closed, dealers said.

Profit taking, in particular in the late trading session, focused on contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), which saw its weighting cut by MSCI, while iPhone assembler Hon Hai Precision Industry Co. stayed resilient amid optimism over its efforts in artificial intelligence server development, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 44.05 points, or 0.19 percent, at the day's low of 22,948.37 after coming off a high of 23,173.43. Turnover totaled NT$468.90 billion (US$10.56 billion).

The market opened up 0.40 percent and moved to a high, rising 268 points in the early morning session as investors took their cue from a rally on U.S. markets, where the Dow Jones Industrial Average hit a record high, up 0.97 percent with the tech-heavy Nasdaq index rising 0.16 percent on Friday, dealers said.

However, after the Taiex breached the 23,000 point mark, some profit taking emerged and selling became more apparent in the last few minutes of the session, a reflection of index adjustments by MSCI, dealers said.

"The expanded turnover largely came in the wake of weighting adjustments by MSCI, and TSMC was the focus of selling as the stock suffered the steepest cut in its weighting on the MSCI Taiwan Index," according to Hua Nan Securities analyst Kevin Su.

After the regular index review, TSMC's weighting was cut by 0.39 percentage points to 52.48 percent.

On the local main board, TSMC, the most heavily weighted stock, which is the major supplier of AI chips to U.S.-based chip designer Nvidia Corp., lost 0.96 percent to close at NT$1,030.00 after coming off a high of NT$1,050.00.

The change from TSMC's high to its low offset the Taiex's gains by about 160 points Monday.

"Losses suffered by TSMC showed the stock moved in consolidation but I am still upbeat about its movement over the longer term on the back of AI development," Su said.

MSCI raised Taiwan's weighting in one of its major indexes but cut the country's weighting in another index after a regular review. The index provider also decided to leave unchanged Taiwan's weighting in the MSCI Emerging Markets Index, which is closely watched by foreign institutional investors.

TSMC's selling affected other semiconductor stocks with smartphone IC designer MediaTek Inc. falling 2.29 percent to end at NT$1,280.00, and IC packaging and testing service provider ASE Technology Holding Co. dropping 0.32 percent to close at NT$156.00.

Bucking the downturn, United Microelectronics Corp., a smaller contract chipmaker, rose 1.01 percent to end at NT$44.90.

"Compared with TSMC, some other AI related stocks appeared attractive due to relatively low valuations, serving as an anchor to stabilize the broader market," Su said.

"Hon Hai is one of them, on hopes that its shipments of GB200 AI servers powered by Nvidia's Blackwell chips will increase significantly in the first quarter of next year."

iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, rose 3.69 percent to close at the day's high of NT$210.50. Wistron Corp., another AI server supplier, gained 5.06 percent to end at NT$124.50, while Wistron's cloud-enabled services subsidiary Wiwynn Corp. rose 3.29 percent to close at NT$2,200.00.

With buying rotating out of tech heavyweights like TSMC, investors sought buying opportunities in the old economy sector, Su said.

"Today, the construction industry came under the spotlight. I prefer to say the gains were simply technical in nature as many construction stocks had fallen a lot recently," Su said. "The industry remains haunted by the central bank's selective credit controls."

In the construction industry, which rose 2.39 percent, Cathay Real Estate Development Co. rose 3.71 percent to close at NT$26.55, and Kuoyang Development Co. gained 4.25 percent to end at NT$23.30.

Shipping stocks pulled back from recent gains to push the transportation index down by 1.87 percent. Among them, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, lost 3.39 percent to close at NT$228.00.

In the financial sector, which rose 0.77 percent, Fubon Financial Holding Co. added 1.34 percent to close at NT$90.50, and Cathay Financial Holding Co. ended up 0.75 percent at NT$67.30.

"Investors should pay close attention to the October U.S. Personal Consumption Expenditures (PCE) index, the Federal Reserve favors to adjust its policy, due on Wednesday," Su said.

"Before that, the Fed will release the minutes of its policymaking meeting held in November which is also worth watching," he said.

According to the TWSE, foreign institutional investors bought a net NT$5.22 billion worth of shares on the main board Monday.