Taiwan shares breach 11,000 points after Wall Street rally

Taipei, Taiwan shares soared past the technical resistance mark of 11,000 points Monday morning as investors here were encouraged by a rally on Wall Street at the end of last week, dealers said.

Buying focused on large cap stocks in the bellwether electronics sector, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), which helped boost the main board by more than 100 points, they said.

Market sentiment has been high since the release of the latest U.S. jobs data as investors are hoping that the stable growth of the U.S. economy, the largest in the world, will bode well for the global economy, dealers said.

As of 11:23 a.m., the weighted index on the Taiwan Stock Exchange, the Taiex, had climbed 133.78 points, or 1.22 percent, to 11,082.86 on turnover of NT$92.24 billion (US$3.10 billion).

The local main board opened higher and vaulted past 11,000 points as investors took cues from a higher Wall Street, where the Dow Jones Industrial Average ended up more than 200 points Friday after the U.S reported a drop in unemployment to 3.8 percent, its lowest since April 2000, dealers said.

"Taipei is not the only market rising in the region," MasterLink Securities analyst Tom Tang said. "It seems that many investors elsewhere in the region are hailing the U.S. economic recovery."

He noted that in addition to the decline in unemployment, the U.S. created 223,000 jobs in May, beating the market forecast of 188,000.

"It was a strong showing in the U.S. economy so investors in the region are gearing up to raise their equity holdings," Tang said. "In Taiwan, the bellwether electronics sector is a winner today."

TSMC, the world's largest contract chipmaker, had climbed NT$4.50, or 2.01 percent, to NT$228.50 Monday, with 15.44 million shares changing hands as of 11:23 a.m. The most heavily weighted stock on the market, TSMC contributed about 45 points to the Taiex gains.

Also in the high-tech sector, iPhone assembler Hon Hai Precision Industry Co., second only to TSMC in terms of market value, had risen 1.27 percent to NT$87.70, while Largan Precision Co., a smartphone camera lens supplier to Apple Inc., was up 4.48 percent at NT$4,435.

"The three heavyweights served as a driver to the local main board soon after the market opened today," Tang said.

Meanwhile, throughout the region, investors are upbeat about the equity market movement as fears have eased over political standoff in Italy with the formation of a coalition government there.

"With concerns over the political situation in the EU fading, more and more investors are willing to buy," Tang said. "Buying in the main board is likely to rotate from one sector to another, sustaining the strength of the market in the short term."

Source: Focus Taiwan News Channel