Shares in Taiwan moved higher Wednesday as the bellwether electronics sector bounced back in the wake of gains posted by tech stocks on the U.S. markets overnight, dealers said.
Buying also focused on the financial sector on hopes that a rate hike cycle launched by the U.S. Federal Reserve will help financial institutions generate more returns from their overseas investments, they said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 171.66 points, or 0.98 percent, at 17,731.37, after moving between 17,581.62 and 17,738.69. Turnover totaled NT$283.56 billion (US$9.93 billion).
U.S. stock rally
The market opened up 0.12 percent, and buying accelerated, in particular in the late trading session, led by large-cap tech and financial stocks, pushing the Taiex up close to the day’s high, as investors were encouraged by gains on the U.S. markets, where the Dow Jones Industrial Average rose by 0.74 percent and the tech-heavy Nasdaq index soared by 1.96 percent overnight, dealers said.
“The U.S. markets, again, dictated the local main board,” Mega International Investment Services Corp. analyst Alex Huang said, adding that the latest rally at home and abroad showed that many investors had temporarily forgotten their worries over rising interest rates.
“Today’s gains helped the Taiex jump over the nearest technical resistance ahead of 17,710 points,” Huang said. “But I prefer to say the upturn was technical in nature as fears over a rate hike cycle is likely to come back to haunt the global markets.”
The Fed kicked off a rate hike cycle last week. Fed Chair Jerome Powell hinted earlier this week that the American central bank will raise its key interest rates by 50 basis points in May to deal with inflationary pressure.
Tech sector
Huang said investors influenced by the gains on the Nasdaq index bought into tech heavyweights on the local main board by taking advantage of their recent weakness caused by rising interest rates which made them look less attractive.
“The semiconductor industry led the tech sector in steaming ahead as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) drew a lot of attention from many bargain hunters,” Huang said. “But,the stock is still faced with high technical hurdles ahead of NT$600.00.”
TSMC, the most heavily weighted stock in the local market, rose by 1.20 percent to close at the day’s high of NT$590.00. On the back of TSMC’s gains, the electronics sector rose by 1.01 percent with the semiconductor sub-index up by 1.12 percent.
Among other big semiconductor stocks, application specific IC Alchip Technologies, Ltd. rose by 3.61 percent to end at NT$1,005.00; Novatek Microelectronics Corp., which supplies drive ICs for flat panels, rose by 2.42 percent to close at NT$445.00; and United Microelectronics Corp., a smaller contract chipmaker, increased by 0.56 percent to end at NT$53.80.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co., which has entered the electric vehicle (EV) market, rose by 1.44 percent to close at NT$105.50 on reports that the company will start pre-order sales for its model C EV in October.
Among electronics component makers, printed circuit board supplier Compeq Manufacturing Co. increased by 2.17 percent to close at NT$49.40, and power management solution provider Delta Electronics Inc. rose by 0.95 percent to end at NT$264.50.
Financials
“The financial sector served as another pillar for the Taiex throughout the session as financial firms only favored higher interest rates,” Huang said.
The financial sector rose by 1.96 percent with Fubon Financial Holding Co. up by 2.15 percent to close at NT$75.90, and Cathay Financial Holding Co. up by 1.89 percent to end at NT$64.80. In addition, Mega Financial Holding Co. rose by 2.92 percent to close at NT$42.35, and CTBC Financial Holding Co. increased by 2.28 percent to end at NT$29.20.
While tech and financial stocks stole most of the market’s spotlight, the old economy sector was mostly quiet, Huang said.
In the sector, Tung Ho Steel Enterprise Corp. fell by 1.34 percent to close at NT$80.70, while China Steel Corp., the largest steelmaker in Taiwan, rose by 0.50 percent to end at NT$40.00. Meanwhile, Formosa Plastics Corp. closed unchanged at NT$107.50.
“The Taiex is expected to continue to move in consolidation mode in the near future and the next technical resistance is expected at the 60-day moving average of 17,912 points,” Huang said.
According to the TWSE, foreign institutional investors bought a net NT$11.27 billion worth of shares on the main board Wednesday.
Source: Focus Taiwan News Channel