Taipei--Shares in Taiwan extended their momentum from a session earlier to close above the 9,600-point mark Friday on the back of strong buying in large-cap stocks in both electronics and non-high tech stocks, as investors took cues from a record high posted by the Dow Jones Industrial Average, dealers said.
Market sentiment also improved after MSCI Inc., a global index provider, decided to leave Taiwan's weighting in the MSCI Emerging Markets Index unchanged, stopping 13 reductions in a row in the past index reviews, the dealers said.
The weighted index on the Taiwan Stock Exchange (TWSE) ended up 75.41 points, or 0.79 percent, at 9,665.59, after moving between 9,612.67 and 9,688.15, on turnover of NT$133.04 billion (US$4.29 billion).
The market opened up 0.23 percent to breach 9,600 points on a higher Wall Street, where the Down Jones Industrial Average rose 0.59 percent to hit a new high, and the S&P 500 index gained 0.58 percent overnight after U.S. President Donald Trump said he will make a tax cut announcement to cut the financial burden shouldered by American "big league" businesses, they said.
Buying on the local main board accelerated, as investors were encouraged to jump onto the trading floor to pick up market heavyweights by the latest MSCI decision leave unchanged Taiwan's weighting in the MSCI Emerging Markets Index, which foreign institutional investors have followed closely, they said. The strength continued until the end of the session, with the index moving above 9,600 points throughout the trade.
"The gains on Wall Street made many investors chase prices after the local equity market gained significantly in recent sessions," KGI Securities analyst Phil Chu said. "The global markets have high hopes that a tax cut in the United States will boost the U.S. economy and benefit the world."
"Local sentiment was also lifted by the MSCI's move. I suspect that today's foreign institutional buying was sparked by the MSCI's decision," Chu said. According to the TWSE, foreign institutional investors bought a net NT$5.58 billion-worth of shares on the main board Friday.
Chu said that buying focused on large-cap stocks, helping the weighted index jump over the technical hurdles ahead of 9,600 points. "Largan Precision Co. (???) closed at a record high. As the most expensive stock in the local equity market, its gains gave a big lift to the broader market today," Chu said.
Largan, a smartphone camera lens supplier to Apple Inc., rose 2.82 percent to end at NT$4,740.00. Its sound fundamentals in reflection of the technology lead over its peers have prompted institutional buyers, in particular foreign ones, to buy, the dealers said.
Also in the high-tech sector, Hon Hai Precision Industry Co., an assembler of iPhones and iPads, added 0.22 percent to close at NT$89.10 after MSCI raised the stock's weighting in the MSCI index by 0.05489 percentage points, the largest increase among the local stocks.
Contract chip maker Taiwan Semiconductor Manufacturing Co. (???), the most heavily weighted stock in the local market, gained 0.82 percent to end at the day's high of NT$185.50, with 34.75 million shares changing hands.
Chu said that raw material makers, in particular in the petrochemical sector, continued to ride the wave of a recovery in product prices, and witnessed their share prices rise.
Among the gaining petrochemical stocks, Formosa Plastics Corp. (??) rose 2.55 percent to close at NT$92.50, Nan Ya Plastics Corp. (??) gained 2.52 percent to end at NT$77.20, and Formosa Chemicals and Fibre Corp. (??) added 2.06 percent to close at NT$99.00.
In the financial sector, which ended up 0.89 percent, Cathay Financial Holding Co. (???) rose 1.26 percent to close at NT$48.30, and Mega Financial Holding Co. (???) added 1.07 percent to end at NT$23.70.
"The local equity market could face some technical resistance ahead of 9,700 points, but if the weighted index is able to sustain around 9,600 points, an uptrend is expected to continue after a technical pullback," Chu said.
Source: Focus Taiwan News Channel