Shares in Taiwan moved sharply higher to close above the 16,900-point mark Tuesday as large tech stocks regained their footing after losses on Monday in the wake of a rally among their counterparts on the U.S. markets overnight, traders said.
As the bellwether electronics sector attracted most investors' attention, old economy and financial stocks appeared mixed throughout the session, they said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 195.21 points, or 1.17 percent, at 16,900.67, after moving between 16,772.15 and 16,916.72. Turnover totaled NT$265.38 billion (US$9.50 billion).
The market opened up 0.51 percent and buying accelerated as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) left behind the doldrums from a session earlier and led the tech sector in moving higher due to a 0.84 percent increase on the tech-heavy Nasdaq index overnight, dealers said.
The strong buying on the main board continued into the end of the session as many other tech stocks followed suit in posting gains, helping the electronics sector account for almost 60 percent of the total turnover at the end of the session, they said.
"After a pause seen yesterday, buying in the local tech sector was triggered by a higher Nasdaq, led by Apple Inc. shares," Concord Securities analyst Kerry Huang said. Apple rose 1.18 percent after it unveiled two new MacBook Pro models overnight.
"TSMC is one of the so-called Apple concept stocks. In addition, the chipmaker, delivered positive leads in its investor conference last week, simply leading the entire electronics sector as well as the Taiex in going higher today," Huang said, referring to the company's comments including the confirmation that its advanced 3 nanometer process will launch mass production as scheduled as well as a strong outlook for the fourth quarter.
TSMC, the most heavily weighted stock in the local market, rose 1.69 percent to close at the day's high of NT$600.00. Led by TSMC, the electronics index rose 1.85 percent to end at 803.36 with the semiconductor sub-index up 2.03 percent.
"But, TSMC could see stiff technical resistance after it breaches NT$600.00 so the room for the electronics index to go higher could be limited with 809 points the nearest ceiling," Huang said.
Among other Apple concept stocks, Largan Precision Industry Co., a supplier of smartphone camera lenses, rose 3.02 percent to close at NT$2,050.00, and rival Genius Electronic Optical Co. gained 4.59 percent to end at NT$399.00.
Other Apple suppliers in the local printed circuit board industry attracted strong buying, dealers said. Kinsus Interconnect Technology Corp. and Unimicron Technology Corp. both surged 10 percent, the maximum daily increase, to close at NT$237.50, and NT$141.50, respectively.
Bucking the upturn, iPhone assembler Hon Hai Precision Industry Co. fell 0.47 percent to end at NT$107.00 as its involvement in electric vehicles was factored in, Huang said. Hon Hai, also known as Foxconn globally, introduced its first three EV models in Taipei on Monday.
TSMC's buying also spread to other semiconductor stocks with United Microelectronics Corp., a smaller contract chipmaker, up 2.05 percent to close at NT$59.60, and integrated circuit designer MediaTek Inc. up 3.58 percent to end at NT$898.00.
"As the electronics sector absorbed most of today's turnover, non-tech stocks largely moved quietly," Huang said. "However, select raw material stocks posted gains related to an uptrend in crude prices."
Among them, textile brand Far Eastern New Century Corp. rose 0.85 percent to close at NT$29.70, and Tung Ho Textile Co. gained 1.18 percent to end at NT$17.20. In addition, Nan Ya Plastics Corp. added 0.45 percent to close at NT$88.90.
In the transportation sector, which ended down 0.40 percent with many major shipping stocks traded, container cargo shipper Evergreen Marine Corp. fell 0.76 percent to close at NT$91.70, and rival Yang Ming Marine Transport Corp. lost 1.12 percent to end at NT$88.00.
"After recent heavy losses, these shipping stocks were faced with margin calls, paving the way for more volatility," Huang said.
A margin call occurs when the value of an investor's margin account falls below the broker's required amount, requiring the investor to either deposit more money or sell some of the assets held in the account.
In the financial sector, which fell 0.19 percent, Cathay Financial Holding Co. lost 0.51 percent to close at NT$58.40, and Fubon Financial Holding Co. fell 0.40 percent to end at NT$74.80.
"After today's gains, the Taiex is likely to see high technical hurdles ahead of the 60-day moving average of 17,088 points," Huang said.
"Investors should continue to watch closely how the benchmark 10-year U.S. treasury yield will move since higher rates will make tech stocks look less attractive."
According to the TWSE, foreign institutional investors bought a net NT$11.09 billion worth of shares on the main board Tuesday.
Source: Focus Taiwan News Channel