Taipei--Shares in Taiwan closed above 10,500 points on Wednesday, driven higher by gains posted by Apple Inc.'s Taiwanese suppliers on the consumer electronics giant's higher than expected sales projections for the third quarter, dealers said.
Smartphone camera lens supplier Largan Precision Co. (???) ended at a record high on hopes that the next generation iPhones will boost its third quarter shipments, and that optimism spread to other "Apple concept stocks," they said.
The weighted index on the Taiwan Stock Exchange ended up 81.98 points, or 0.79 percent, at the day's high of 10,519.27, off an early low of 10,479.26, on turnover of NT$121.754 billion (US$3.99 billion).
The market opened up 0.40 percent, led by the bellwether electronics sector, after the Dow Jones Industrial Average closed up 0.33 percent and the tech-heavy Nasdaq ended up 0.23 percent in the United States overnight, dealers said.
Buying in local electronics stocks, especially Apple suppliers, then continued to pick up momentum as Apple shares soared by as much as 6 percent in the U.S. in after-hours trading, sending the weighted index in Taipei to its high for the day at the close.
At its investor conference on Tuesday, Apple reported second quarter net income of US$8.7 billion, or US$1.67 a share, beating market expectations of US$8.2 billion in net profit, or US$1.57 per share.
Apple also forecast sales for the current quarter of between US$49 billion and US$52 billion, compared with a market consensus of US$49.21 billion.
"Apple's results served as a driver of Taiwan's high-tech sector today as many local electronics firms are part of Apple's supply chain," Concord Securities analyst Kerry Huang said.
"In particular, Apple shares soared in after-hours trading, which bode well for the movement of high-tech stocks in the U.S. market later in the day, which could continue to boost their Taiwanese counterparts," Huang said.
The analyst was also encouraged by the U.S. company's guidance for the third quarter.
"The sales guidance indicated that Apple is upbeat about its outlook for the current quarter, when the new iPhones are scheduled to hit the market," Huang said.
"That optimism encouraged investors here to pick up Apple concept stocks soon after the local equity market opened."
Among the major suppliers to Apple, Largan, the most expensive stock in Taiwan, rose 4.82 percent to close at a new high of NT$5,765.00 after hitting an intraday high of NT$5,810.00.
Contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???), which is believed to be supplying the A11 processor for next-generation iPhones, gained 1.89 percent to end at NT$216.00, while Hon Hai Precision Industry Co. (??), an assembler of iPhones and iPads, added 1.72 percent to close at NT$118.50.
"Judging from the gains posted by these large cap stocks, I think foreign institutional investors were buyers today," Huang said.
According to Taiwan Stock Exchange data, foreign institutional investors bought a net NT$8.7 billion worth of shares on the main exchange Wednesday.
"Due to the strong showing of these Apple suppliers, the electronics sector dominated the market today, accounting for more than 70 percent of the total turnover," Huang said. "But old economy stocks appeared slow."
In the non-high-tech sector, Nan Ya Plastics Corp. (??) fell 0.79 percent to close at NT$75.40, and food brand Uni-President Enterprises Corp. (??) lost 0.34 percent to end at NT$58.80, while Cathay Financial Holding Co. (???) gained 0.31 percent to close at NT$49.15.
"After the weighted index breached the 10,500-point mark today, the main board turned technically healthier, so the index will likely move higher and soon challenge 10,545, the intraday high seen on June 27," Huang said.
Source: Focus Taiwan News Channel