Shares in Taiwan moved sharply higher Wednesday as strong interest pushed up contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) by more than 4.5 percent amid liquidity-driven buying, dealers said.
The semiconductor industry also got a boost from solid gains enjoyed by their counterparts on U.S. markets overnight as concerns have eased over the possibility of more aggressive rate hikes by the United States Federal Reserve, dealers added.
The Taiex, the Taiwan Stock Exchange’s benchmark weighted index, ended up 291.05 points, or 2.18 percent, at the day’s high of 13,638.81 after hitting a low of 13,410.19. Turnover totaled NT$237.80 billion (US$7.47 billion).
Wednesday’s closing level was the highest since Oct. 7, when the Taiex ended at 13,702.28.
The market opened up 0.47 percent and buying focused on semiconductor heavyweights after a 2.15 percent surge on the Philadelphia Semiconductor Index overnight, dealers said.
The Taiex was also helped by a stronger Taiwan dollar against the U.S. dollar, which showed signs of less pressure on fund outflows after a fall in the U.S. dollar index on Tuesday, dealers said.
“It was a liquidity driven uptrend today as funds returned to the local market because of the weaker U.S. dollar,” Concord Capital Management analyst Lu Chin-wei said.
U.S. dollar falls below NT$32
The U.S. dollar fell below the NT$32 mark against the Taiwan dollar Wednesday morning on the Taipei forex market after the U.S. dollar index, which tracks the currencies of Washington’s six major trading partner, dipped below the 60-day moving average Tuesday.
According to Lu, Wednesday’s turnover topped the average NT$200 billion in the previous five trading sessions, indicating that investors were more willing to play the market.
“It seemed to me that worries over a hawkish Fed have been largely priced in,” Lu said.
“Investors at home and abroad appeared more willing to pick up bargains in the tech sector, which had been hit hard by rising interest rates. I’m guessing foreign institutional investors were on the buy side today.”
According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$24.13 billion in shares Wednesday, and the electronics sector closed 3.25 percent higher at the day’s high.
Tech stocks
The semiconductor sub-index also closed at its high for the day, gaining 4.30 percent. Those gains were mostly driven by TSMC, which rose 4.51 percent to close at the day’s high of NT$417.00. TSMC’s gains contributed about 160 points along to the Taiex’s rise.
“Today, TSMC made a strong comeback and served as the major anchor to drive the Taiex sharply higher,” Lu said. “After a recent slump, the stock’s valuation has become attractive to many bargain hunters.”
TSMC’s buying spread to other large cap semiconductor stocks, with smartphone IC designer MediaTek Inc. ending 4.84 percent higher at NT$650.00, and United Microelectronics Corp. (UMC), a smaller contract chipmaker, closing 3.24 percent higher at NT$41.45.
IC packaging and testing services provider ASE Technology Holding Co. also closed up 2.84 percent at NT$86.80.
UMC’s display IC design subsidiary Novatek Microelectronics Corp. soared 10 percent, the maximum daily increase, to close at NT$285.00, and power management IC designer Silergy Corp. rose 5.29 percent to end at NT$428.00.
Also in the electronics sector, flat panel maker Innolux Corp. gained 3.53 percent to close at NT$13.20, and iPhone assembler Hon Hai Precision Industry Co. rose 2.50 percent to end at the day’s high of NT$102.50.
“Since buying was largely concentrated in the tech sector, many old economy and financial stocks appeared to be marginalized today,” Lu said.
“But it’s possible that the market will benefit from rotational buying, which will boost non-tech stocks when the electronics sector takes a pause.”
Old economy stocks
In the old economy sector, Formosa Petrochemical Corp. closed unchanged at NT$83.30, while Formosa Plastics Corp. rose 0.58 percent to end at NT$86.00.
In addition, food brand Uni-President Enterprises Corp. lost 0.31 percent to close at NT$65.30, but rival Wei Chuan Foods Corp. gained 1.08 percent to end at NT$18.70.
Shipping stocks appeared mixed with container cargo shippers Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. up 1.74 percent and 2.27 percent, respectively, to close at NT$64.50 and NT$72.00.
But, bulk cargo shipper Tze Shin International Co. closed unchanged at NT$13.35, and rival Sincere Navigation Corp. lost 1.87 percent to end at NT$18.35.
In the financial sector, Cathay Financial Holding Co. rose 1.13 percent to close at NT$40.15, while CTBC Financial Holding Co. lost 1.62 percent to end at NT$21.20.
“I expect liquidity-driven buying will continue to push up the Taiex, leading the market to challenge the high technical hurdles ahead of the 60-day moving average of 13,970 points in the short term,” Lu said.
Source: Focus Taiwan News Channel