Taiwan shares hit new highs on futures-led buying

Taipei, Feb. 20 (CNA) Shares in Taiwan closed at a new high Tuesday on futures-led buying as investors pushed up the spot market in a bid to profit in the futures market, where February contracts are scheduled to be settled Wednesday, dealers said.

Select large cap semiconductor stocks, in particular contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), reversed their losses from the previous session to serve as a driver of gains on the broader market, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 117.36 points, or 0.63 percent, at 18,753.16 after moving between 18,610.21 and 18,756.33. Turnover totaled NT$352.27 billion (US$11.19 billion).

The market opened down 25.59 points at the day's low but soon regained its footing as buying emerged to boost semiconductor stocks, including display driver IC designer Novatek Microelectronics Corp. and smartphone IC designer MediaTek Inc., vaulting the Taiex back into positive territory, Capital Investment Management analyst Liao Chien-yu said.

In the late trading session, interest in TSMC, the most heavily weighted stock on the local market, accelerated to push up the broader market further by the end of the session, Liao said.

On Tuesday, the Taiex closed at an historical high, beating the previous closing high of 18,644.57 seen on Feb. 15, the first trading session of the Year of the Dragon, while the latest intraday high topped the previous intraday high of 18,725.47, also recorded on Feb. 15.

"To my knowledge, foreign institutional investors cut their short position futures contracts in recent sessions," Liao said. "The most effective way for them to boost the Taiex on the spot market was to add large cap stocks including TSMC and MediaTek before February futures settle tomorrow."

According to the TWSE, foreign institutional investors bought a net NT$6.38 billion worth of shares on the main board Tuesday after net sales of NT$10.85 billion on Monday.

TSMC, which reversed a 0.73 percent decline on Monday, rose 1.33 percent to close at NT$687.00 on Tuesday. The chipmaker's gains contributed more than 70 points to the Taiex's rise and sent the bellwether electronics index and semiconductor sub-index up by 0.89 percent and 1.31 percent, respectively.

"TSMC's performance on Monday and Tuesday showed the market is full of active rotational buying," Liao said.

MediaTek, second to TSMC in terms of market capitalization, rose 1.97 percent to end at NT$982.00, and Novatek, a subsidiary of United Microelectronics Corp. (UMC), gained 6.73 percent to close at NT$587.00. UMC, a smaller contract chipmaker, ended up 0.20 percent at NT$49.25.

Among other semiconductor stocks, IC packaging and testing services provider ASE Technology Holding Co. rose 0.74 percent to close at NT$137.00, application-specific integrated circuit (ASIC) designer Alchip Technologies Ltd. added 1.72 percent to end at NT$4,150.00, and communication network IC designer Realtek Semiconductor Corp. rose 3.72 percent to close at NT$487.50.

Also in the tech sector, shares in Quanta Computer Inc., one of the leading AI server suppliers, rose 0.41 percent to end at NT$240.50, and iPhone assembler Hon Hai Precision Industry Co. gained 0.49 percent to close at NT$103.50.

"While foreign institutional investors stood on the buy side today, the Taiwan dollar stayed weaker and that means no new funds entered the local market," Liao said. "So, as the electronics sector attracted buying, old economy and financial stocks appeared mixed with funds squeezed."

The U.S. dollar closed up NT$0.097 at NT$31.492 Tuesday. Dealers said a stronger greenback reflected concerns over when the Federal Reserve will kick off a rate cut cycle after Washington reported higher than expected inflation data for January.

The steel industry, which rose 1.44 percent on Monday, fell 0.75 percent, China Steel Corp., the largest steel maker in Taiwan, lost 0.39 percent to end at NT$25.30, China Steel Structure Corp. dropped 0.57 percent to close at NT$52.30, and Chung Hung Steel Corp. ended down 1.43 percent at NT$24.05.

Elsewhere in the old economy sector, Eclat Textile Co. gained 4.41 percent to close at NT$31.60, and Far Eastern New Century Corp., another textile brand, added 0.80 percent to end at NT$31.60, while Formosa Plastics Corp. lost 0.14 percent to close at NT$73.70, and Nan Ya Plastics Corp. ended down 0.49 percent at NT$61.30.

The transportation industry rose 1.26 percent after The Rubymar, a Belize-flagged, British-registered cargo vessel, was attacked by Yemen's Houthi militants in the Gulf of Aden Monday.

In the industry, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, rose 3.02 percent to close at NT$153.50, and rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. gained 1.57 percent and 2.67 percent, respectively, to end at NT$48.65 and NT$48.15.

The financial sector rose 0.34 percent with Fubon Financial Holding Co. up 0.61 percent to close at NT$66.50 but E. Sun Financial Holding Co. down 0.20 percent at NT$24.75.

"After the futures settlement, I expect the spot market to enter consolidation mode following a new closing Taiex high," Liao said.

"Moreover, investors should pay close attention to an investor conference scheduled by Nvida Corp. for Thursday (Taipei time) for guidance about the AI market, which could move tech stocks worldwide."