Shares in Taiwan moved sharply higher Tuesday as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) soared more than 7.8 percent on news that Berkshire Hathaway had taken a stake in the company, dealers said.
While the electronics sector drove the broader market higher, led by TSMC, old economy and financial stocks seemed marginalized after a recent rebound, dealers said.
The Taiex, the Taiwan Stock Exchange’s benchmark weighted index, ended up 371.41 points, or 2.62 percent, at 14,546.31, after moving between 14,278.53 and 14,568.51. Turnover totaled NT$298.35 billion (US$9.6 billion).
Taiwan’s market ignored a 0.63 percent decline in the Dow Jones Industrial Average and a 1.12 percent fall in the tech-heavy Nasdaq index, opening 1.06 percent higher on news of the Berkshire Hathaway investment.
In a filing with the U.S. Securities and Exchange Commission, Warren Buffett’s company said it had bought US$4.1 billion of TSMC’s American depositary receipts (ADRs) by the end of September, according to foreign media.
That sent TSMC shares shooting higher by 7.87 percent to NT$480.00 by the end of the trading session, setting a two-month high.
TSMC’s gains contributed almost 300 points alone to the Taiex’s rise Tuesday, and they led the electronics sector and the semiconductor sub-index to move higher by 4.07 percent and 6.32 percent, respectively.
“Investors seized on the Berkshire filing to buy TSMC shares aggressively today. Many of them thought it was unusual for Buffett to invest in a tech stock, and the purchase could be a first step toward picking up more TSMC shares,” Cathay Futures Consultant analyst Tsai Ming-han said.
“Based on how Buffet invests, he generally likes to hold stocks for the long run, so the purchase showed he was upbeat about TSMC’s long-term outlook and saw the current inventory adjustments in the global semiconductor industry as just a hiccup to the company,” Tsai said.
A total of 113.23 million TSMC shares were traded Tuesday, almost double the 61.88 million shares traded Monday, as strong buying helped the stock overcome technical resistance ahead of NT$450.00.
Tsai warned, however, that the news-driven buying in TSMC shares could be short-lived after investors compose themselves.
Other semiconductor heavyweights benefited from the TSMC rally.
IC packaging and testing services provider ASE Technology Holding Co. gained 1.20 percent to end at NT$92.80, smartphone IC designer MediaTek Inc. ended up 3.59 percent to close at NT$722.00, and United Microelectronics Corp., a smaller contract chipmaker, closed 3.79 percent higher at NT$46.60.
Also in the electronics sector, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., rose 3.66 percent to close at NT$2,125.00, and Yageo Corp., the world’s third largest maker of multi-layer ceramic capacitor (MLCCs), gained 3.53 percent to close at NT$455.00.
Power management solution provider Delta Electronics Inc. added 2.63 percent to close at NT$293.00, but iPhone assembler Hon Hai Precision Industry Co. underperformed the Taiex, ending unchanged at NT$101.50.
“There was uneven buying today as TSMC attracted most of the market attention,” Tsai said. “Non-tech stocks were largely moving in a narrow range amid fears over a technical pullback after a recent rally,” Tsai said.
Before Tuesday’s surge, the Taiex had jumped 1,225.15 points, or 9.46 percent, since the beginning of this month.
Among the large cap old economy stocks under pressure, textile supplier Far Eastern New Century Co. shed 4.67 percent to close at NT$31.65, and Taiwan Cement Corp. lost 0.88 percent to end at NT$33.85.
Also, Formosa Plastics Corp. lost 0.56 percent to close at NT$88.60, and food brand Uni-President Enterprises Corp. dropped 0.15 percent to end at NT$66.00.
The steel sector bucked the downturn suffered by many other old economy stocks, rising 1.22 percent. China Steel Corp., the largest steel maker in Taiwan, closed 0.52 percent higher at NT$29.10, and Chung Hung Steel Corp. soared 7.35 percent to end at NT$24.10.
In the financial sector, which rose 0.55 percent, Cathay Financial Holding Co. rose 1.56 percent to close at NT$42.40, and Fubon Financial Holding Co. gained 0.18 percent to end at NT$56.40, while Mega Financial Holding Co. lost 0.48 percent to close at NT$31.15.
“The U.S. markets have started corrections, and I’m afraid the Taiex will be affected,” Tsai said.
“But with foreign institutional investors likely to move more funds into the region as concerns ease over more aggressive rate hikes by the U.S. Federal Reserve, there will be less room for losses on the local market.”
According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$34.80 billion in shares Tuesday.
Source: Focus Taiwan News Channel