Shares in Taiwan extended their strength from the previous session to close above the 14,500 point mark Friday, as Taiwan Semiconductor Manufacturing Co. (TSMC) attracted strong buying after it gave upbeat sales guidance for 2022, dealers said.
While TSMC, the world’s largest contract chipmaker, led the bellwether electronics sector and the broader market higher, financial and old economy stocks largely remained in the doldrums, which ensured turnover remained moderate, they said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 112.10 points, or 0.78 percent, at 14,550.62, after moving between 14,378.33 and 14,579.73. Turnover totaled NT$226.76 billion (US$7.57 billion).
Mixed U.S. markets overnight
The market opened up 0.31 percent and fluctuated in a narrow range in the early morning session in the wake of a 0.46 percent fall on the Dow Jones Industrial Average amid lingering concerns over inflation, dealers said.
However, momentum started to build on the Taiex in the mid-morning session as many investors shifted to the buy side, using the 1.92 percent rise on the Philadelphia Semiconductor Index overnight as a reason to pick up shares in TSMC, dealers said.
The chipmaker gave a rosy assessment about its sales growth for 2022, pushing up the main board by more than 100 points by the end of the session, they added.
After a 2.93 percent increase in its American depositary receipts on Thursday, TSMC, the most heavily weighted stock on the local market, soared 3.68 percent to close at NT$492.50.
TSMC’s gains represented a rise of about 145 points on the Taiex, and led the electronics sector and the semiconductor sub-index to move higher by 2.14 percent and 2.74 percent, respectively.
“The Philadelphia Semiconductor Index outperformed the Dow Thursday reflecting an upbeat TSMC at its investor conference,” Hua Nan Securities analyst Kevin Su said.
“While there are growing concerns over rising inventory levels in the global semiconductor industry, TSMC does not feel much of the pinch. Today, the Taiex was a one-company show,” Su added.
TSMC’s upbeat 2022 forecast
TSMC said its sales for 2022 are expected to grow 35 percent from a year earlier in U.S. dollar terms, an upgrade from a 30 percent increase forecast in June. It noted that demand for chips made by its high-end processes used in high performance computing devices, 5G applications, data centers and automotive electronics remains solid.
The chipmaker admitted that due to weakening demand for consumer electronic devices such as smartphones, some of its clients have adjusted their inventories by scaling back orders but the impact has been offset by strong demand for high-end technologies.
“I expect TSMC to encounter strong technical resistance as it moves closer to NT$500.00,” Su said.
TSMC buying spread to other semiconductor stocks with shares in dynamic random access memory (DRAM) chip supplier Nanya Technology Corp. rising 3.11 percent to end at NT$51.40.
Application-specific IC (ASIC) designer Alchip Technologies Ltd. gained 2.56 percent to close at NT$600.00, and IC packaging and testing service provider ASE Technology Holding Co. grew 1.02 percent to end at NT$79.20.
Also in the tech sector, iPhone assembler Hon Hai Precision Industry Co. underperformed and closed unchanged at NT$105.00 as the stock has appeared resilient in recent sessions, when the Taiex took a beating, on the back of its efforts to expand into the electric vehicle market.
However, buying rotated to other stocks which have also set their sights on the EV market, including power management solution provider Delta Electronics Inc., which rose 2.30 percent to end at NT$245.00.
In addition, Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., surged 4.46 percent to close at NT$1,990.00 after several foreign brokerages raised their target price on the stock, citing an increase in its gross margin in the second quarter.
Underperformers
“When market attention focused on TSMC, non-tech stocks largely lost their luster,” Su said. “Most of them faced selling with the financial sector suffering heavy losses as investors took their cue from the weakness of bank stocks on U.S. markets overnight in the wake of disappointing earnings.”
In the financial sector, which lost 1.86 percent, Yuanta Financial Holding Co, shed 3.84 percent to close at NT$18.80, CTBC Financial Holding Co. lost 2.02 percent to end at NT$21.80, Cathay Financial Holding Co. fell 1.89 percent to close at NT$44.15, and Fubon Financial Holding Co. dropped 1.72 percent to end at NT$57.30.
Elsewhere, the transportation sector fell 1.49 percent with China Airlines down 2.16 percent to close at NT$22.65 and rival EVA Airways down 1.43 percent to end at NT$32.35.
“Only when buying is seen in more sectors instead of only TSMC, is turnover likely to expand to NT$250 billion or higher and vault the Taiex past high technical hurdles ahead of the 20-day moving average of 15,000 points,” Su said.
Despite a higher Taiex, foreign institutional investors stood on the sell side, registering net sales of NT$11.17 billion worth of shares on the main board Friday.
Source: Focus Taiwan News Channel