Taipei: Shares in Taiwan experienced a significant surge on Tuesday as mounting expectations for a rate cut by the Federal Reserve in December drove investors to purchase large semiconductor stocks. This movement follows substantial gains in the United States markets overnight.
According to Focus Taiwan, the Taiex, Taiwan Stock Exchange's weighted index, rose by 407.93 points, or 1.54 percent, closing at 26,912.17. The index fluctuated between 26,793.71 and 27,118.02, with a total turnover of NT$475.68 billion (US$15.12 billion). The market opened with a 1.86 percent increase, continuing the upward trend spurred by a 2.69 percent rise in the Nasdaq index. This boost came after Federal Reserve Governor Christopher Waller expressed support for a December rate cut, joining other dovish Fed officials.
Leading the charge was contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock, which saw a 2.91 percent increase to close at NT$1,415.00. Despite some tech heavyweights relinquishing earlier gains, TSMC's performance provided significant support to the Taiex.
Hua Nan Securities analyst Kevin Su noted that Waller's comments increased the likelihood of a December rate cut to 80 percent, generating excitement among investors both domestically and internationally. Su added that TSMC's gains were also fueled by optimism regarding AI development, contributing approximately 320 points to the Taiex's rise and propelling the electronics index up by 2.26 percent.
The surge in semiconductor stocks extended to smartphone IC designer MediaTek Inc., which climbed 1.34 percent to NT$1,185.00, and memory chip supplier Winbond Electronics Corp., which rose 5.31 percent to NT$57.50. Additionally, Global Unichip Corp., TSMC's ASIC design subsidiary, soared by 10 percent, reaching the maximum daily increase at NT$57.50.
Conversely, AI server maker and iPhone assembler Hon Hai Precision Industry Co., the second largest in market value after TSMC, decreased by 0.45 percent to close at NT$219.00, following a high of NT$225.50 due to profit-taking.
Su highlighted that while the electronics sector garnered attention, nontech stocks generally weakened, except for the 'military concept' industry, which benefited from increased government defense spending. Drone developer Thunder Tiger Corp. increased 6.77 percent to NT$130.50, and aircraft maintenance service provider Air Asia Co. rose 4.55 percent to NT$149.50. However, Chung-Hsin Electric and Machinery Manufacturing Corp. saw a decrease of 1.65 percent, closing at NT$149.00, and Fortune Electric Co. fell 3.54 percent to NT$681.00.
In the financial sector, Cathay Financial Holding Co. experienced a decline of 0.61 percent, ending at NT$65.10.
Su concluded that the Taiex overcame technical resistance at 26,771 points, the 5-day moving average, strengthening the market technically. Nonetheless, investors remain attentive to U.S. market performance, which continues to influence Taiwan's tech stocks.
According to the TWSE, foreign institutional investors purchased a net NT$6.34 billion worth of shares on the main board on Tuesday.