Shares in Taiwan yesterday rose as the de-escalation of trade tensions between the US and China provided immediate relief to the nation’s major contract electronics manufacturers, many of which have substantial production capacities in China.
The TAIEX closed up 200.6 points, or 0.95 percent, at 21,330.14, catching up with big advances on Wall Street overnight, where the tech-heavy NASDAQ Composite rose more than 4 percent, the S&P 500 jumped 3.3 percent and the Dow Jones Industrial Average increased 2.8 percent.
“The US-China significant tariff cut was encouraging, so US markets jumped overnight and the Taipei market just followed today,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang (黃國偉) said.
Photo: CNA
The bellwether electronics sector led the upturn throughout the session, rising 1.17 percent after shares in contract chipmaker Taiwan Semiconductor Manufacturing Co (台積電) rose 1.25 percent to close at NT$969, Huang added.
“The upcoming Computex Taipei prompted investors to pick up artificial intelligence [AI] related tech stocks on hopes of positive leads from the annual tech exhibition,” he said.
Shares of Hon Hai Precision Industry Co (鴻海), a supplier of AI servers and an assembler of Apple Inc’s iPhones, rallied 3.27 percent to NT$158, Taiwan Stock Exchange data showed.
Hon Hai stands to benefit the most from the US-China trade truce as about 75 percent of its production facilities are in China, dealers said.
The company relies heavily on its Chinese production bases despite ongoing diversification efforts. Its facility in Zhengzhou, China, remains the world’s largest iPhone manufacturing site, while the Shenzhen plant is a hub for iPhone research and development and pilot production.
With US-China tariffs reduced to 30 percent and 10 percent from the previous 145 percent and 125 percent respectively, pressure on the Apple supply chain and notebook production lines has been substantially subdued, dealers said.
Other electronics suppliers including Quanta Computer Inc (廣達電腦), Inventec Corp (英業達), Wistron Corp (緯創), Pegatron Corp (和碩) and Compal Electronics Inc (仁寶) also stand to gain from reduced tariff pressures, they added.
Compal’s Chinese factories — in Kunshan, Nanjing, Chongqing and Chengdu — accounted for 70 percent of its total output last year. Quanta has major notebook production sites in Chongqing and Shanghai, while Inventec operates plants in Shanghai, Chongqing and Nanjing, focusing on servers, automotive electronics and laptops.
Pegatron, with about 70 percent of its total production in China, manufactures automotive products and handles some consumer electronics assembly in Suzhou, while Wistron’s Chinese operations account for less than 50 percent of its total output, as the company diversifies globally.
UBS Group said it has preferences in Taiwan’s supply chain compared with their Chinese peers, as firms in the AI supply chain are better off and more insulated from the tariff tensions.
A better tariff outcome would broaden the tech portfolio somewhat with smartphones already discounting a challenging outcome, UBS head of Taiwan research Randy Abrams said in a note.
Ryanair, Transavia, Volotea and other low-cost airlines are feeling the financial pain from high jet fuel prices as a result of the Middle East war and are cutting flights. The closure of the Strait of Hormuz has taken a huge chunk of oil supplies off the market, sending the price of jet fuel soaring and triggering fears of shortages that could force airlines to cancel flights. Airlines are not waiting for a lack of supplies to react. “Travel alert: Airlines are cutting thousands of flights right now,” Travel Therapy host Karen Schaler said in an Instagram reel this past weekend.
MANAGING RISKS: Taiwan has secured LNG sufficient to cover 95 percent of electricity demand for next month, UBS said, describing the government’s approach as proactive UBS Group AG has raised its forecast for Taiwan’s economic growth this year to 8 percent, up from 6.9 percent previously, and said expansion could reach as high as 8.6 percent if external energy shocks are avoided. The upgrade reflects a stronger-than-expected first-quarter performance and sustained momentum in artificial intelligence (AI)-driven exports, which UBS said are providing a firm foundation for growth despite geopolitical and energy risks. Taiwan’s GDP expanded 13.69 percent year-on-year in the first quarter, the fastest growth since the second quarter of 1987, the Directorate-General of Budget, Accounting and Statistics (DGBAS) reported on Thursday. On a seasonally
The Fair Trade Commission’s (FTC) ongoing review of Grab Holdings Ltd’s US$600 million acquisition of Foodpanda Taiwan’s operations, announced on March 23, has taken on fresh urgency as industry experts warn that the transaction could embed significant Chinese cybersecurity vulnerabilities into Taiwan’s digital infrastructure through Grab’s deep ties to autonomous-driving firm WeRide (文遠知行). Less than 16 months after the FTC blocked Uber Eats’ direct attempt to acquire Foodpanda Taiwan — citing potential combined market shares of 80 to 90 percent — the emergence of Grab as the buyer has prompted questions about whether the same competitive harm is simply being rerouted
The list of Asian stocks that benefit from business partnership with Nvidia Corp is getting longer, as the region further integrates into the artificial intelligence (AI) chip giant’s business ecosystem. Just in the past week, South Korea’s LG Electronics Inc, Taiwan’s Nanya Technology Corp (南亞科技), as well as China’s Huizhou Desay SV Automotive Co (德賽西威) and Pateo Connect Technology Shanghai Corp (博泰車聯) have become the latest to rally on news of tie-ups, supply-chain participation or product collaboration with the US chip designer. Asian suppliers account for about 90 percent of Nvidia’s production costs, up from about 65 percent last year, data compiled
RSS