Shares in Taiwan extended momentum from a session earlier and closed above the 9,200-point mark Wednesday, led by Taiwan Semiconductor Manufacturing Co. (TSMC, ???), the most heavily weighted stock in the local equity market, dealers said.
The strong buying was sparked by eased fears over an immediate interest rate hike by the U.S. Federal Reserve, with foreign institutional investors continuing to move funds into the region, which not only boosted share prices but also maintained the value of the Taiwan dollar against the U.S. dollar, the dealers said.
The weighted index on the Taiwan Stock Exchange closed up 77.22 points, or 0.84 percent, at 9,259.07, after moving between 9,202.23 and 9,278.88, on turnover of NT$86.90 billion (US$2.79 billion).
The market opened up 0.22 percent to push up the weighted index to breach 9,200 points, on follow-through buying from Tuesday in a knee-jerk reaction to a higher Wall Street, where the tech-heavy NASDAQ index hit a record high overnight, the dealers said.
The strength of the bellwether electronics sector accelerated as buying focused on TSMC, the world's largest contract chip maker, to lead the broader market to move even higher, and momentum continued to push up the weighted index to close at a high not seen since July 3, 2015, when the index closed at 9,358.23 points, they said.
"It seems that fears over a rate hike by the Fed in September has been reduced significantly," Mega International Investment Services Corp. analyst Alex Huang said. "Foreign institutional investors have resumed their aggressive buying in the local equity market." The Fed is scheduled to hold its next policymaking meeting Sept. 20-21.
After Washington reported a lower-than-expected August non-farm payroll data Sept. 2, foreign institutional investors bought almost a net NT$17.6 billion-worth of shares on the main board in the first two days of this week. On Wednesday, foreign institutional buyers bought a net worth of NT$7.01 billion.
In addition to aggressive buying in the spot market, foreign institutional investors held a net 89,600 long position contracts in the local futures market as of Tuesday, serving as additional evidence of strong foreign interest in local equities.
"That's why TSMC steamed ahead today to lead the weighted index to breach 9,200 points. Since the index closed above that level, the local main board has become healthier technically, and investor sentiment has improved significantly," Huang said.
TSMC rose 2.79 percent to NT$184.00, with 49.73 million shares changing hands after the chipmaker said a day earlier that it expects its growth momentum to continue over the next five years on the back of rising momentum in several segments such as smartphones, the Internet of Things, automotive electronics and high-efficiency computing.
"But TSMC is likely to encounter strong technical resistance as the stock moves closer to NT$185.00. I am afraid that the stock could enter consolidation mode soon," Huang said.
Led by TSMC, the electronics sector closed up 1.03 percent, and the semiconductor sub-index ended up 1.97 percent.
Also in the electronics sector, Largan Precision Co. (???), a smartphone camera lens supplier to Apple Inc., gained 1.92 percent to close at NT$3,720.00, to remain the most expensive stock in Taiwan, and Catcher Technology Co. (??), a metal casing maker for Apple, added 4.54 percent to end at NT$242.00.
Apple was expected to unveil the next-generation iPhone models later in the day.
Among the gaining old-economy stocks, Formosa Chemicals and Fibre Corp. (??) rose 2.15 percent to close at NT$85.40, and Nan Ya Plastics Corp. (??) gained 0.97 percent to end at NT$62.40.
Source: Focus Taiwan News Channel