Taiwan shares soar as Fed's rate cut hopes grow

Taipei, Nov. 25 (CNA) Shares in Taiwan moved sharply higher Tuesday as growing hopes for a rate cut by the Federal Reserve in December prompted investors to buy large semiconductor stocks, following strong gains in the United States overnight.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 407.93 points, or 1.54 percent, at 26,912.17 after moving between 26,793.71 and 27,118.02. Turnover totaled NT$475.68 billion (US$15.12 billion).

The market opened up 1.86 percent and buying continued on the back of a 2.69 percent increase on the tech-heavy Nasdaq index overnight, after Fed Governor Christopher Waller joined other dovish Fed officials in saying he supported a rate cut in December.

The Taiex was led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock on the market, which added 2.91 percent to close at NT$1,415.00, before some other tech heavyweights gave up their earlier gains and limited the broader upturn.

"Waller's remarks boosted the chance of a December rate cut to 80 percent and made many investors at home and abroad excited," Hua Nan Securities analyst Kevin Su said.

"TSMC's gains also reflected optimism about AI development. The stock served as an anchor for the Taiex," Su said. TSMC's gains contributed about 320 points to the Taiex's rise and sent the electronics index 2.26 percent higher.

Buying also spread to other semiconductor stocks with smartphone IC designer MediaTek Inc. up 1.34 percent to NT$1,185.00, and memory chip supplier Winbond Electronics Corp. up 5.31 percent to NT$57.50.

TSMC's application specific integrated circuit (ASIC) design subsidiary Global Unichip Corp. soared 10 percent, the maximum daily increase, to NT$57.50.

However, AI server maker and iPhone assembler Hon Hai Precision Industry Co., second to TSMC in market value, lost 0.45 percent to close at NT$219.00, off a high of NT$225.50 on profit taking.

"With the electronics sector under the spotlight, nontech stocks largely weakened, except the 'military concept' industry, which was boosted by an increase in government defense spending," Su said.

Drone developer Thunder Tiger Corp. gained 6.77 percent to NT$130.50, and aircraft maintenance service provider Air Asia Co. rose 4.55 percent to NT$149.50.

On the other hand, Chung-Hsin Electric & Machinery Manufacturing Corp. lost 1.65 percent to close at NT$149.00, and Fortune Electric Co. fell 3.54 percent to NT$681.00.

In the financial sector, Cathay Financial Holding Co. fell 0.61 percent to NT$65.10.

"The Taiex overcame technical resistance at 26,771 points, the 5-day moving average, making the market technically stronger," Su said. "But, investors still have to watch how the U.S. markets will perform, which continue to dictate Taiwan's tech stocks."

According to the TWSE, foreign institutional investors bought a net NT$6.34 billion worth of shares on the main board Tuesday.