TAIPEI: Taiwan Semiconductor Manufacturing Co (TSMC) shares surged 3.74 percent here the other day, shrugging off a series of negative news stories, including Qualcomm Inc cutting its financial forecast for this year.
TSMC shares rallied to NT$152.5, with 135 million shares changing hands, triple Thursday’s 47 million shares.
“Foreign investors are scrambling to buy local shares amid speculation about the stock exchange link between Taiwan and China,” Jih Sun Securities Investment Consulting Co analyst Kevin Chung said by telephone.
“TSMC benefits from this TAIEX boom,” Chung said.
The stock exchange link might give a boost to the local stock market in the short term as valuation of Taiwanese shares are relatively cheap compared with their counterparts in China and Hong Kong, Chung said.
Overseas fund managers doubled their purchases of local shares to a net NT$46.48 billion (US$1.497 billion) from NT$22.32 billion on Thursday, targeting the nation’s major electronics companies and financial shares, Taiwan Stock Exchange data showed.
“TSMC is the among the nation’s heavyweight stocks and naturally becomes the target of foreign investors,” Mega International Investment Services Corp analyst Alex Huang said.
Foreign investors were also urged to buy Taiwanese shares after the central bank reminded them that they are not allowed to park capital in the nation without buying local stocks, Huang said.
However, whether TSMC’s share price will remain strong next week is uncertain, as the company faces some headwinds. The company’s shares had been in consolidation mode for some time due to its lower-than-expected sales forecast for the second quarter.
Last week, TSMC lowered capital spending to US$11 billion this year and projected that revenue would drop as far as 8 percent sequentially to NT$204 billion, partly due to weak demand for its chips as it lost orders from a major customer.
On Wednesday, Qualcomm, one of TSMC’s biggest customers, forecast an adjusted profit of US$4.6 to US$5 per share and US$25 billion to US$27 billion in revenue for its current fiscal year, which ends in September.
