Shares in Taiwan closed little changed, after coming off major gains on Wednesday, while the momentum of contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) continued to lend support to the broader market, dealers said.
Although a recent rebound on the broader market has been capped for now, market sentiment has improved to some extent amid eased concerns over a hawkish U.S. Federal Reserve in its ongoing rate hike cycle in the wake of moderating inflation data for October, dealers added.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down by 8.96 points, or 0.06 percent, at 14,537.35 after moving between 14,481.06 and 14,657.66. Turnover totaled NT$282.6 billion (US$9.07 billion).
The market opened up by 0.63 percent as the buying of TSMC stocks continued after recent news about the purchase of a large chunk of the stock’s American depositary receipts (ADRs) by Warren Buffet’s Berkshire Hathaway, and the chipmaker’s momentum pushed the Taiex over the 14,600-point mark at one point, dealers said.
But, profit-taking soon followed to blunt TSMC’s upturn to an extent, while old economy and financial stocks mainly weakened as the market focused on the bellwether electronics sector, led by the semiconductor industry. That dragged the main board into negative territory by the end of the session, dealers said.
TSMC rose by 1.46 percent to close at NT$487.00, after coming off a high of NT$494.00 and its gains led the electronics sector and semiconductor sub-index to move higher by 0.71 percent and 1.30 percent.
On Tuesday, the stock soared by almost 9 percent Tuesday after the news surfaced Monday about Buffet having purchased US$4.1-billion worth of the chipmaker’s ADRs by the end of September on high hopes that American equity investors will hold TSMC shares for a long time amid optimism about the chipmaker’s long-term outlook.
“Judging from today’s TSMC movement, investors appeared calm about Buffet’s purchases,” Huang said. “It was no surprise that caution about a technical pullback arose when the stock moved closer to the nearest technical resistance ahead of NT$505.00.”
Other tech stocks
The increase in interest in TSMC also extended to other semiconductor stocks, in particular companies which have close business ties with the chipmaker, Huang said.
Among them, IC packaging and testing services provider ASE Technology Holding Co. increased by 0.86 percent to end at NT$93.60, and smartphone IC designer MediaTek Inc. rose by 0.97 percent to close at NT$729.00.
In addition, TSMC’s application-specific integrated circuit design subsidiary Global UniChip Corp. surged by 7.10 percent to end at NT$694.00.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. closed unchanged at NT$101.50, while flat-panel makers AU Optronics Corp. and Innolux Corp. fell by 3.04 percent and 2.65 percent, respectively, to end at NT$17.55 and NT$12.85 amid worries over falling screen prices.
“As TSMC remained under the spotlight, non-tech stocks largely came under pressure, letting more air out of the market,” Huang said.
Commidity stocks
Dealers said selling in commodity stocks was apparent amid fears over the global economic slowdown with the petrochemical and steel sectors falling by 1.82 percent and 1.06 percent, respectively.
Among them, Formosa Petrochemical Corp. dropped by 3.14 percent to close at NT$83.20, Nan Ya Plastics Corp. fell by 2.43 percent to end at NT$72.40, Formosa Chemicals & Fibre Corp. fell by 1.48 percent to close at NT$73.30, and Formosa Plastics Corp. decreased by 1.35 percent to end at NT$87.40.
Ta Chen Stainless Pipe Co. fell by 1.09 percent to close at NT$40.85, and China Steel Corp., the largest steel maker in Taiwan, decreased by 1.03 percent to end at NT$28.80.
Financial sector
In the financial sector, which fell by 1.15 percent, Cathay Financial Holding Co. decreased by 1.65 percent to close at NT$41.70, Fubon Financial Holding Co. fell by 1.60 percent to end at NT$55.50, and Shanghai Commercial & Savings Bank closed down by 1.29 percent at NT$45.80.
“As more investors are anticipating that the Fed will raise its key interest rates by 50 basis points in December, instead of 75 basis points as previously expected, the Taiex’s rebound could continue after a short pause,” Huang said.
“But, investors should keep a close eye on how far the rate hike cycle will go to reach the ultimate levels, rather than just the pace.”
According to the TWSE, foreign institutional investors stayed on the buy side, registering a net buy of NT$11.58 billion worth of shares on the main board Wednesday after a net buy of NT$34.80 billion on Tuesday.
Source: Focus Taiwan News Channel