Taiwan shares end sharply up on U.S.-China trade talks, Fed rate cut hopes

Taipei, Oct. 27 (CNA) Shares in Taiwan closed sharply higher Monday with buying sparked by optimism over trade talks between the United States and China as well as hopes of a rate cut by the U.S. Federal Reserve this week, dealers said.

However, the index failed to remain above the 28,000-point mark at the end of the session as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) came off its day's high on profit taking, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 461.37 points, or 1.68 percent, at the day's low of 27,993.63, off a high of 28,196.33. Turnover totaled NT$548.05 billion (US$17.81 billion).

"Like other Asian markets, local investors were encouraged by the upbeat mood over U.S.-China trade talks to raise their holdings today," Masterlink Securities analyst Tom Tang said. On Sunday, U.S. and Chinese negotiators agreed to the framework of a trade deal before U.S. President Donald Trump and Chinese President Xi Jinping meet in South Korea Thursday.

"Buying focused on tech stocks as many investors were hoping for a rate cut by the Fed after Washington reported cooler than expected inflation in September," Tang said. "Lower interest rates will no doubt make tech stocks attractive compared with their dividend yields."

TSMC, the most heavily weighted local stock, rose 2.07 percent to close at NT$1,480.00, off a high of NT$1,500.00. TSMC's fall from the day's high cost the Taiex about 160 points.

"It seems the NT$1,500 mark has become a psychological barrier for some investors but TSMC's fundamentals remain sound on booming artificial intelligence development," Tang said.

Among other semiconductor firms, shares in smartphone IC designer MediaTek Inc. rose 3.09 percent to end at NT$1,335.00, and IC packaging and testing services provider ASE Technology Holding Co. grew 3.32 percent to close at NT$202.50. Memory chip supplier Nanya Technology Corp. soared 10 percent, the maximum daily increase, to end at NT$120.00.

Also riding the AI wave, iPhone assembler and AI server maker Hon Hai Precision Industry Co. gained 3.14 percent to close at NT$246.50, and Quanta Computer Inc., another AI server supplier, rose 5.45 percent to end at NT$309.50.

"With AI stocks booming, non-tech industries largely lagged behind," Tang said.

Eclat Textile Co. fell 1.71 percent to close at NT$430.00 and rival Makalot Industrial Co. shed 3.14 percent to end at NT$278.00. In addition, Tung Ho Steel Corp. lost 1.44 percent to close at NT$61.80, while China Steel Corp., the largest steel maker in Taiwan, added 0.26 percent to end at NT$18.95.

Bucking the downturn, Hua Eng Wire and Cable Co. rose 5.33 percent to close at NT$31.60, and Walsin Lihwa Corp. added 3.22 percent to end at NT$30.45 on higher copper prices.

In the financial sector, which lost 0.42 percent, Mercuries Life Insurance Co. surged 10 percent to close at NT$7.39 as E. Sun Financial Holding Co. is reportedly looking to acquire the insurer. However, E. Sun Financial shed 7.02 percent to end at NT$30.30.

"Despite the framework agreed upon by American and Chinese negotiators, investors need to watch closely how the Trump-Xi meeting proceeds as uncertainties remain before a formal deal is cut," Tang said.

According to the TWSE, foreign institutional investors bought a net NT$$32.64 billion worth of shares on the main board Monday.