Taiwan shares end lower but TSMC stays resilient

Shares in Taiwan closed lower Wednesday, as market sentiment remained cautious about the United States Federal Reserve’s rate hike cycle, which has prompted many foreign investors to move their funds out of the Asian region, dealers said.

While selling focused on old economy and financial stocks throughout the trading session, the bellwether electronics sector bucked the downturn, as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) remained resilient, helping to anchor the broader market, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 55.45 points, or 0.35 percent, at 16,006.25, after moving between 15,953.27 and 16,081.15. Turnover totaled NT$206.21 billion (US$6.94 billion).

The market opened down 7.95 points, and selling increased, pushing the Taiex to the day’s low by mid-morning, following a mixed performance overnight of the U.S. markets, where the Dow Jones Industrial Average fell 0.26 percent and the tech-heavy Nasdaq index rose 0.98 percent, dealers said.

TSMC

After the Taiex dipped below 16,000 points, however, buying emerged, with bargain hunters picking up semiconductor heavyweights, in particular TSMC, which helped cushion the fall of the main board by the end of the session, dealers added.

The electronics sector rose 0.03 percent, with the semiconductor sub-index gaining 0.56 percent. TSMC, the most heavily weighted stock on the local market, rose 0.55 percent to close at NT$521.00, off a low of NT$518.00, its nearest technical support.

Hua Nan Securities analyst Lu Chin-wei said a rate hike cycle by the Fed continued to affect investor sentiment, with many of them staying on the sidelines, which resulted in thin turnover.

“The buying in TSMC came after the chipmaker gave a strong sales report the previous day, which indicated healthy fundamentals,” Lu said. “Even if the stock falls below NT$518, it is likely to hold above NT$500, as a low valuation will attract many bargain hunters.”

TSMC, the world’s largest contract chipmaker, on Tuesday reported record sales of NT$172.56 billion for April, up 0.3 percent from a month earlier and 55 percent from a year earlier, driven by strong demand for emerging technologies, even in a typically slow season for the semiconductor industry.

Other tech stocks

Lu said the buying Wednesday was seen not only in TSMC but also in other semiconductor stocks, in particular the recently hard-hit IC design companies, which helped the broader market recoup some of its earlier losses.

Among the gaining semiconductor stocks, smartphone IC designer MediaTek Inc. rose 1.10 percent to end at NT$829.00, and application-specific IC designer Alchip Technologies Ltd. climbed 1.77 percent to close at NT$922.00.

Power management IC designer Silergy Corp. soared 4.76 percent to close at NT$2,530, and IC packaging and testing services provider ASE Technology Holding Co. finished 0.84 percent higher at NT$96.20.

Some other major tech stocks finished flat, including iPhone assembler Hon Hai Precision Industry Co., which closed unchanged at NT$103.00. Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., fell 0.31 percent to end at NT$1,615.00.

Meanwhile, power management solution provider Delta Electronics Inc. lost 1.32 percent to close at NT$223.50, and flat panel maker Innolux Corp. shed 2.90 percent to end at NT$13.40.

Outside tech sector

“While large-cap semiconductor stocks benefited from bargain hunting and stole the spotlight, non-tech stocks came under pressure amid worry over a flight of funds, as the Fed raises interest rates,” Lu said.

The transportation sector, where major shipping stocks are traded, lost 2.26 percent, with Evergreen Marine Corp., the largest container cargo shipper in Taiwan, falling 3.02 percent to close at NT$144.50. Its competitor Yang Ming Marine Transport Corp. dropped 2.75 percent to end at NT$124.00.

Elsewhere in the old economy sector, Wei Chuan Foods Corp. lost 2.31 percent to close at NT$21.15, and Uni-President Enterprises Corp., another food brand, fell 0.99 percent to finish at NT$66.30.

In the financial sector, which lost 0.97 percent, Cathay Financial Holding Co. shed 3.10 percent to close at NT$56.20, and Fubon Financial Holding Co. fell 1.34 percent to end at NT$66.20, while E. Sun Financial Holding Co. rose 0.99 percent to close at NT$30.65.

“The U.S. is scheduled to release its April consumer price index report later in the day, which will give more clues about the Fed’s monetary policy to handle inflation,” Lu said.”Investors should keep a close eye on that data.”

According to the TWSE, foreign institutional investors sold a net NT$15.09 billion worth of shares on the main board Wednesday.

Source: Focus Taiwan News Channel