Shares in Taiwan moved higher Thursday as investors took cues from an overnight rally in the U.S. triggered by the Federal Reserve ruling out the possibility of overly aggressive rate hikes later in the year, dealers said.
The bellwether electronics sector attracted buying throughout the session as investors hunted for bargains among recently heavily hit tech heavyweights, dealers added.
Meanwhile, the financial sector came under pressure to cap the upturn on the broader market, dealers said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 130.29 points, or 0.79 percent, at 16,696.12, after moving between 16,650.81 and 16,783.78. Turnover totaled NT$250.85 billion (US$8.51 billion).
The market opened up 0.75 percent and soon breached the 16,700 point mark to hit the day’s high in the early morning session.
Investors took cues from the strong overnight showing on the U.S. markets, where the Dow Jones Industrial Average rose 2.81 percent and the tech-heavy Nasdaq index gained 3.19 percent.
But, technical resistance was seen as the Taiex hit 16,700 points, while the electronics sector continued its strong showing to offset some selling from investors who pocketed their earlier gains.
This eventually helped the broader market to close above the 10-day moving average of 16,657 points.
“The gains on the U.S. markets came as investors felt relieved as the Fed did not appear as hawkish as previously expected,” Hua Nan Securities analyst Lu Chin-wei said.
After a two-day policymaking meeting, which concluded overnight, the Fed decided to raise its key interest rates by 50 basis points after a 25 basis point hike in March.
However, Fed Chair Jerome Powell ruled out more aggressive action, saying that a 75-basis-point increase was not something that the committee was actively considering.
According to Hua Nan’s Lu, “the 50 basis point rate hike at the May meeting had been widely anticipated by the markets worldwide. Now, Powell’s remarks simply prompted investors at home and abroad to buy, and in Taipei, tech heavyweights got a boost from reduced worries over a more aggressive Fed.”
The electronics sector rose 1.29 percent and accounted for about 54 percent of the total turnover on Thursday, with the semiconductor sub-index up 1.70 percent.
Leading the IC industry and the entire tech sector to move higher, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, rose 1.50 percent to close at NT$542.00 after its U.S. depositary receipts (ADRs) on the markets there gained 2.52 percent overnight.
In the wake of a 4.08 percent increase in its ADRs on Wednesday, United Microelectronics Corp. (UMC), a smaller contract chipmaker, grew 1.66 percent to end at NT$49.10, while IC packaging and testing service provider ASE Technology Holding Co. gained 2.07 percent to close at NT$98.60.
IC designers also benefited from bargain hunting, with smartphone IC designer MediaTek Inc. rising 1.45 percent to end at NT$841.00. In addition, application-specific IC (ASIC) designer Alchip Technologies Ltd. rose 2.49 percent to close at NT$945.00, and power management IC designer Silergy Corp. soared 4.10 percent to end at NT$2,790.00.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. rose 0.48 percent to close at NT$104.50, while power management solution provider Delta Electronics Inc. ended unchanged at NT$214.00.
“Judging from today’s movement, I suggest investors keep alert over the weakness of the financial sector. The rate hike leads had been largely reflected in financial stocks’ recent gains,” Lu said.
The financial sector underperformed the Taiex, ending down 1.02 percent, with Mega Financial Holding Co. falling 2.45 percent to close at NT$39.85, and Taishin Financial Holding Co. dropping 2.58 percent to end at NT$18.90. Meanwhile, Cathay Financial Holding Co. lost 0.95 percent to close at NT$62.30, and Fubon Financial Holding Co. shed 0.13 percent to end at NT$74.50.
In line with a stronger Taiex, the steel sector also rose 1.16 percent. China Steel Corp., the largest steelmaker in Taiwan, gained 0.83 percent to close at NT$36.35, and Ta Chen Stainless Pipe Co. rose 3.73 percent to end at NT$45.90.
Elsewhere, the transportation sector rose 0.95 percent with Evergreen Marine Corp., the largest Taiwanese container cargo shipper, up 0.66 percent to close at NT$152.50 and rival Wan Hai Lines Ltd. up 3.03 percent to end at NT$153.00.
“The local main board is likely to rebound further but if the Taiex fails to close above 17,000 points, the gains will not be strong enough to lead the market to return to an uptrend at a time of a rate hike cycle,” Lu said.
According to the TWSE, foreign institutional investors bought a net NT$3.83 billion worth of shares on the main board Thursday.
Source: Focus Taiwan News Channel