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Taiwan shares end up, led by semiconductor stocks

Taiwan shares end up, led by semiconductor stocks

Shares in Taiwan closed higher Tuesday as the semiconductor sector led the upturn on the back of newly announced buy-out deals at a time when the global integrated circuit business is in consolidation mode, dealers said.

Siliconware Precision Industries Co., the third-largest IC packaging and testing service firm, made a strong showing after Taiwanese rival Advanced Semiconductor Engineering Inc. (ASE), the largest in the world, which holds a 25 percent stake in Siliconware, said a day earlier that it will acquire the remaining 75 percent, the dealers said.

Inotera Memories Inc., one of Taiwan's leading dynamic random access memory (DRAM) chip makers, attracted significant buying after U.S.-based counterpart Micron Technology Inc. -- which already has a 33 percent stake in the Taiwanese firm -- announced that it is buying the remaining 67 percent, the dealers said.

Despite the strength of the entire semiconductor sector, the broader market encountered some selling in the latter part of the session as investors locked in their earlier gains amid concerns over a possible interest rate hike by the U.S. Federal Reserve, they said.

The weighted index on the Taiwan Stock Exchange closed up 33.19 points, or 0.41 percent, at the day's low of 8,073.35, off an early high of 8,140.06, on turnover of NT$72.33 billion (US$2.21 billion).

The market opened up 0.42 percent in a knee-jerk reaction to a rebound on Wall Street, where the Dow Jones Industrial Average closed up 0.68 percent overnight after crude oil prices bounced back, the dealers said.

Buying accelerated, helping the weighted index breach the 8,100- point mark before selling set in, and became more obvious in the late trading session to erode the gains on the broader market at the close, they said.

"Judging from the reduced market turnover, I think that many investors preferred to stay on the sidelines amid rising fears that foreign institutional investors will move more funds out of the region," Ta Ching Securities analyst Andy Hsu said. "Concerns over a further fund exodus have resulted from the likelihood of a rate hike by the Fed."

The Fed has scheduled a two-day policymaking meeting for Dec. 15-16. The market widely expects that the U.S. central bank will kick off a rate hike cycle. "That's why investors were reluctant to hold onto their stocks, even though the local main board moved above the 8,100-point mark in the morning session. They simply wanted to keep more money on hand by capitalizing on the early upturn," Hsu said.

The semiconductor sector closed up 0.64 percent and the bellwether electronics sector ended up 0.40 percent.

Siliconware gained 10 percent, the maximum daily increase, to close at NT$50.10 after ASE proposed acquiring a 75 percent stake in Siliconware at NT$55 per share, which represents a 20.88 percent premium over the closing price of Siliconware a day earlier. The acquisition is expected to cost ASE about US$4 billion.

ASE said that the proposal requires Siliconware's board of directors to reply by Dec. 21, and the withdrawal of another proposal made by China's Tsinghua Unigroup last week to buy a 25 percent stake in Siliconware. ASE rose 2.54 percent to end at NT$32.25.

"Neither ASE's proposal nor Tsinghua Unigroup's plan is easy to realize," Hsu said. "For ASE's acquisition, there are antitrust worries and for Tsinghua Unigroup's buy-out, there are political concerns across the Taiwan Strait," Hsu said.

"But Inotera's buy-out deal with Micron seems much easier to achieve as it is less complicated," Hsu said.

Inotera gained 10 percent to close at NT$42.50 after Micron proposed an acquisition through its subsidiary in Taiwan, with the total consideration to reach NT$130 billion. The deal is expected to be completed in the second or third quarter of next year.

"The broader market encountered some selling, in particular in the late session, with several large-cap stocks in focus," Hsu said. "It is possible that the main board will suffer more pressure as foreign investors keep repatriating their funds."

Among the stocks that encountered late session selling, Taiwan Semiconductor Manufacturing Co., the most heavily weighted stock in the local market, fell 0.72 percent to close at NT$138.00, smartphone camera lens supplier Largan Precision Co. lost 2.05 percent to end at NT$2,160.00, and Formosa Plastics Corp. closed down 1.12 percent at NT$70.50. (By Frances Huang)

Updated : 2021-09-23 10:44 GMT+08:00