Taiwan shares hit new high on TSMC's solid gains

Taipei, April 9 (CNA) Shares in Taiwan hit a new closing high Tuesday as Taiwan Semiconductor Manufacturing Co. (TSMC) soared on news of the company's plan to build a third wafer fab in Arizona, which is expected to boost sales in the long-term.

Strong interest was also seen in select old economy stocks, in particular in the electric machinery and wire and cable sectors, dealers said.

The Taiex, the Taiwan Stock Exchange's benchmark weighted index, ended up 378.50 points, or 1.85 percent, at 20,796.20 after moving between 20,521.56 and 20,820.81. Turnover totaled NT$442.30 billion (US$13.78 billion).

The market opened up 0.51 percent as investors shrugged off lackluster U.S. markets, where the Dow Jones Industrial Average lost 0.03 percent and the tech-heavy Nasdaq index edged up 0.03 percent overnight, dealers said.

Momentum then accelerated as investors rushed to pick up TSMC, the main driver of the day's gains, dealers added.

It closed 4.60 percent higher at a new closing high of NT$819.00 after TSMC announced Monday that it will build a third fab in Arizona that uses the advanced 2 nanometer process or even more sophisticated technology.

TSMC's gains contributed more than 290 points alone to the Taiex's rise Tuesday, and sent the electronics index and semiconductor sub-index higher by 2.11 percent and 3.53 percent, respectively.

"There is no doubt that a new fab in Arizona will boost TSMC's revenue in the future," Moore Securities Investment Consulting analyst Adam Lin said.

"But, I'm afraid that much higher operating costs in the U.S. market will erode TSMC's profit margin, and I'm not sure how TSMC will manage its workforce in the United States."

"So, I'm guessing that investors have high hopes that TSMC will report strong sales data for March tomorrow, and will come up with more positive leads at an investor conference scheduled for April 18," Lin said.

"More importantly, I suspect the buying came from major market players and then foreign institutional investors were forced to follow when they saw TSMC moving sharply higher," Lin said.

According to the Taiwan Stock Exchange, foreign institutional investors shifted to the buy side, registering a net buy of NT$20.56 billion in shares Tuesday after a net sell of NT$12.37 billion Monday.

As TSMC drew much of the buying in the semiconductor industry, other semiconductor stocks seemed to be marginalized.

United Microelectronics Corp., a smaller contract chipmaker, rose 0.58 percent to end at NT$52.40 and smartphone IC designer MediaTek Inc. closed 0.87 percent higher at NT$1,160.00.

Bucking the upturn, Alchip Technologies Ltd., an application-specific integrated circuit (ASIC) designer, lost 4.13 percent to end at NT$3,020.00.

The computer and peripheral index fell 0.69 percent as stocks related to artificial intelligence development lost steam. AI server maker Quanta Computer Inc. shed 1.54 percent to close at NT$287.00, and rival Wistron Corp. lost 4.55 percent to end at NT$126.00.

"Old economy industries continued to ride the wave of optimism that the government will continue to present policies in favor of these industries," Lin said.

"Today, the electric machinery and cable and wire suppliers attracted interest on the back of (state-owned) Taiwan Power Co.'s massive investments to improve the country's electricity grid."

In the electric machinery industry, which rose 3.72 percent, Shihlin Electric & Engineering Corp. and Fortune Electric Co. soared 10 percent, the maximum daily increase, to close at NT$344.50 and NT$853.00, respectively, and Rexon Industrial Corp. gained 6.06 percent to end at NT$49.90.

The cable and wire industry rose 3.16 percent, with Hua Eng Wire and Cable Co. surging 10 percent to close at NT$36.30, and Walsin Lihwa Corp. rising 3.19 percent to end at NT$38.80.

Elsewhere in the old economy sector, JSL Construction & Development Co. jumped 10 percent to close at NT$109.50, and Huaku and Development Co. gained 2.30 percent to end at NT$133.50.

In the financial sector, which rose 1.03 percent, Cathay Financial Holding Co. gained 2.28 percent to close at NT$49.45 and Fubon Financial Holding Co. added 1.89 percent to end at NT$70.00.

"There are concerns about the impact on tech stocks at home and abroad if the benchmark 10-year treasury yield continues to move higher," Lin said.

"So, investors should closely watch for Washington's inflation data due out Wednesday to get a better idea of when the Federal Reserve will start a rate cut cycle, which will dictate the movement of treasury yields."