Taiwan shares end higher as tech sector continues to lead rebound

Shares in Taiwan rose Friday for the second straight day, with the bellwether electronics sector boosted by buying, in the wake of strong gains by chip stocks on the United States markets overnight, dealers said.

The buying also spread to select old economy stocks, in the transportation and steel sectors in particular, but the upturn was limited amid lingering concerns over a possible recession, as interest rate hikes continue worldwide, dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 128.26 points, or 0.89 percent, at 14,464.53, after moving between 14,373.84 and 14,552.42. Turnover totaled NT$257.35 billion (US$8.64 billion).

The market opened up 0.88 percent on follow-through buying from Thursday, and it rose to the day's high at around 10 a.m., with large-cap semiconductor stocks leading the upturn, dealers said.

Investors were taking cues from a 4.48 percent increase on the Philadelphia Semiconductor Index on the U.S. markets Thursday, after South Korean Samsung Electronics Co. reported strong second-quarter earnings, dealers said.

At around 11 a.m. Friday, however, the Taiex encountered some headwinds, after the news broke that former Japanese Prime Minister Shinzo Abe had been shot at a political event and was in critical condition, dealers said..

"Abe's shooting shocked investors in Asia, leading to fears that it would destabilize the financial markets," equity market analyst Andy Hsu said. "Fortunately, the Taiex regained its footing to close in positive territory"."

The local main board was still following the movement of the U.S. markets, led by semiconductor heavyweights, after a strong showing by their American counterparts Thursday, dealers said.

The electronics sector on the Taiex rose 1.43 percent, with the semiconductor sub-index gaining 1.93 percent. Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) rose 2.08 percent to close at NT$467.00.

"Samsung's second-quarter results did not answer the question of whether demand for chips was slowing down amid a tighter monetary policy by the U.S. Federal Reserve," Hsu said. "Investors are waiting for TSMC's second-quarter results and its third-quarter and 2022 guidance, which are expected on July 14 at its investor conference."

Other semiconductor stocks appeared mixed, with smartphone IC designer MediaTek Inc. gaining 2.36 percent to end at NT$651.00, and dynamic random access memory (DRAM) chip supplier Nanya Technology Corp. falling 1.68 percent to close at NT$49.65.

Display driver IC designer Novatek Microelectronics Corp. surged 7.33 percent to close at NT$300.00, while United Microelectronics Corp., a smaller contract chipmaker, lost 0.38 percent to end at NT$39.70.

Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. dropped 1.45 percent to end at NT$102.00, while flat panel maker AU Optronics Corp. rose 2.30 percent to close at NT$15.55, and rival Innolux Corp. gained 2.94 percent to finish at NT$12.25 on hopes of a rebound in TV screen prices.

"Shipping stocks also attracted buying, after Evergreen Marine Corp. reported strong sales for June, and a rising transportation sector also contributed to the Taiex's upturn today," Hsu said.

In the transportation sector, which gained 3.04 percent, Taiwan's largest container cargo shipper Evergreen Marine jumped 4.86 percent to close at NT$92.70, after it reported a 59.75 percent year-on-year increase in its June consolidated sales to 60.34 billion.

Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. also soared, by 3.97 percent and 3.43 percent, respectively, to end at NT$86.50 and 120.50.

Select raw material stocks rode the wave of bargain hunting, following their recent losses, with the steel sector gaining 1.24 percent, Hsu said.

China Steel Corp., the largest steel maker in Taiwan, rose 1.03 percent to close at NT$29.35, Tung Ho Steel Enterprise Corp. added 1.32 percent to end at NT$49.80, and Chung Hung Steel Corp. finished 2.69 percent higher at NT$26.70.

The food sector, meanwhile, ended down 1.37 percent, with Uni-President Enterprises Corp. falling 2.55 percent to close at NT$68.80, and chicken meat supplier Great Wall Enterprise Corp. shedding 1.56 percent to end at NT$47.20.

Hsu said that while the Taiex bounced back to close above 14,000 points Thursday and Friday, the gains appeared technical in nature, after its recent heavy losses.

"More global volatility is possible, as the Fed is likely to raise its key interest rates again," he said. "Investors should pay close attention to the U.S. consumer price index for June, which is due next week, to gain a better idea of what the Fed might do next."

Foreign institutional investors stood on the sell side Friday, registering a net sell of NT$3.94 billion worth of shares on the main board, according to the TWSE.

Source: Focus Taiwan News Channel