Taiwan shares end below 17,400 points on U.S. losses – Focus Taiwan

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Taipei, Dec. 5 (CNA) Shares in Taiwan moved lower to close below the 17,400 point mark Tuesday as selling was sparked by losses suffered by the U.S. markets overnight when investors locked in gains built in recent sessions, dealers said.

The bellwether electronics sector led the local main board to trend lower with major artificial intelligence-related stocks in focus in the wake of a 2.68 percent fall in shares of U.S.-based AI chip designer Nvidia Corp., while semiconductor heavyweights also fell to add downward pressure, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended down 93.47 points, or 0.54 percent, at 17,328.01 after moving between 17,252.57 and 17,401.59. Turnover totaled NT$312.53 billion (US$9.93 billion).

The market opened down 0.11 percent and selling escalated and continued into the end of the session.

Investors rushed to trim their holdings in AI-related stocks and contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) in the wake of a 0.84 percent fall on the tech-heavy Nasdaq index and a 1.20 percent decline on the Philadelphia Semiconductor Index on the U.S. markets Monday.

The local electronics index lost 0.71 percent with the semiconductor subindex falling 0.72 percent, driving the Taiex to move lower Tuesday.

“A spike in the U.S. treasury yields on Monday prompted investors to cut their tech holdings on the U.S. markets,” Cathay Futures Consultant analyst Tsai Ming-han said.

“Investors here simply followed suit to punish the local electronics sector, which is highly correlated with U.S. tech stocks,” Tsai added.

“After a strong rally in November, many investors just seized any causes to pocket their gains,” Tsai said.

In November, the Taiex soared 1,432.58 points or 8.95 percent, on the back of a strong showing made by tech stocks amid optimism that the U.S. Federal Reserve is concluding a rate hike cycle and about to cut interest rates next year.

“Washington will release the November non-farm payroll data Friday as one of the most important indicators for the Fed to adjust its monetary policy. So, before the data is due, market sentiment has turned cautious for the moment,” Tsai said.

Tsai said large-cap semiconductor stocks, in particular TSMC, fell victim to such a negative mentality.

In addition, the chipmaker was also affected by speculation that the company will come up with lower capital expenditure for 2024, Tsai said.

TSMC, the local market’s most heavily weighted stock, lost 0.70 percent to close at NT$570.00 but came off a low of NT$567.00.

While TSMC declined to comment on the capex rumors, “if the speculation turns out to be true, the chipmaker can keep more cash on hand and pay higher cash dividends to investors later, which could encourage investors to own the stock, positive to its share price,” Tsai said.

TSMC’s selling spread to other semiconductor stocks. Among them, United Microelectronics Corp., a smaller contract chipmaker, lost 1.99 percent to end at NT$49.20, smartphone IC designer MediaTek Inc. dropped 0.43 percent to close at NT$929.00, and IC packaging and testing services provider ASE Technology Holding Co. ended down 0.38 percent at NT$129.50.

Bucking the downturn, Alchip Technologies Ltd., an application-specific integrated circuit, rose 4.18 percent to close at NT$3,240.00.

“Nvidia shares got hit overnight, leading investors here to sell AI-related stocks today,” Tsai said, adding the sell-off in Nvidia came after reports that several of the company’s executives cut their stakes by taking advantage of the stock’s more than 200 percent rally so far this year.

Quanta Computer Inc., one of the leading AI server makers in Taiwan, lost 1.27 percent to close at NT$195.000, and rival Wistron Corp. lost 2.30 percent to end at NT$98.20. In addition, Inventec Corp., another AI server, shed 2.16 percent to close at NT$40.70, and Giga-Byte Technology Co., a leading graphics card vendor for AI applications, ended down 3.18 percent at NT$228.50.

“While the tech sector stayed in weakness, the main board still saw buying rotate to select old economy industries, which capped the overall losses,” Tsai said.

Tsai said the electric machinery industry attracted interest, rising 1.38 percent, on hopes that a plan by state-owned Taiwan Power Co. to strengthen the country’s electricity grid network will give a boost to their sales.

Among the electric machinery stocks, Shihlin Electric & Engineering Corp., Allis Electric Co. and Fortune Electric Co. soared 10 percent, the maximum daily increase, to close at NT$122.00, NT$77.50 and NT$340.00, respectively. In addition, Chung-Hsin Electric & Machinery Manufacturing Corp. also rose 2.37 percent to end at NT$129.50.

Tsai said an increase in freight rates continued to push up bull cargo shippers with Sincere Navigation Corp. and Tze Shin International Co. surging 10 percent to close at NT$28.80 and NT$17.75, respectively. But, Evergreen Marine Corp., the largest container cargo shipper in Taiwan, lost 0.84 percent to end at NT$117.50.

In the financial sector, which lost 0.30 percent, Cathay Financial Holding Co. fell 1.51 percent to close at NT$45.55, and Fubon Financial Holding Co. ended down 0.47 percent at NT$64.10, while E. Sun Financial Holding Co. rose 0.79 percent to close at NT$25.45.

“Despite the loss, the Taiex still saw technical support ahead of the 10-day moving average at 17,336 points amid ample liquidity, which triggered rotational buying. It is possible that rotational buying will continue,” Tsai said.

According to the TWSE, foreign institutional investors sold a net NT$10.46 billion worth of shares on the main board Tuesday.

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