Shares in Taiwan moved sharply higher to close above 18,100 points Wednesday as momentum on the local main board continued from the previous session in the wake of a rally on the U.S. markets overnight, dealers said.
Buying rotated to the bellwether electronics sector as investors took cues from a strong showing by tech stocks on American markets Tuesday, while select old economy stocks continued to post gains on the back of growing raw material prices worldwide, they said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 185.20 points, or 1.03 percent, at 18,151.76, after moving between 18,039.23 and 18,168.60. Turnover totaled NT$294.06 billion (US$10.56 billion).
Tech stocks
The market opened up 0.52 percent to breach the 18,000-point level and buying escalated into the end of the session to push up the Taiex even higher, largely led by large-cap electronics stocks after the tech-heavy Nasdaq index jumped 1.28 percent and the Philadelphia Semiconductor Index surged by 2.40 percent Tuesday on a technical rebound, dealers said.
The local electronics sector rose by 1.24 percent with the semiconductor sub-index closing up 1.18 percent.
“Thanks to the strong tech stock performance on the U.S. markets overnight, many local electronics heavyweights here made a comeback from recent consolidation caused by concerns over a rate hike cycle to be launched by the U.S. Federal Reserve,” Cathay Futures Consulting analyst Tsai Ming-han said.
“But, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) failed to recover all of its losses from yesterday, although the stock ended higher today,” Tsai said. “I suspect institutional investors were still adjusting their portfolios as they expect MSCI to cut Taiwan’s weighing in its major indexes so TSMC’s gains were limited.”
Global index provider MSCI is scheduled to release the results of its index review early Thursday morning.
TSMC, the most heavily weighted stock in the local market, rose by 0.80 percent to close at NT$633.00 after hitting a high of NT$637.00. The stock fell by 1.10 percent on last-ditch selling Tuesday.
“Fortunately, other large-cap semiconductor stocks benefited from rotational buying, giving the entire electronics sector a significant boost throughout the session, as investors simply reacted positively to their rising American counterparts,” Tsai said.
Outperformers
Among them, United Microelectronics Corp., a smaller contract chipmaker, increased by 1.08 percent to end at NT$56.00; Novatek Microelectronics Corp., which supplies drive ICs for flat panels, increased by 1.99 percent to close at NT$462.00; and smartphone chip designer MediaTek Inc. rose by 3.20 percent to close at NT$1,130.00.
Strong buying also took place with semiconductor stocks on the over-the-counter market such as Genesys Logic Inc., a high-speed interface chip designer, which soared by 10 percent, the maximum daily increase, to close at NT$243.00.
Flat-panel stocks attracted strong buying after the U.S. imposed sanctions on China-based LCD supplier HKC amid lingering trade tensions between Washington and Beijing, dealers said. AU Optronics Corp. rose by 4.83 percent to close at NT$21.70, and Innolux Corp. rose by 3.49 percent to end at NT$17.80.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. rose by 0.95 percent to close at NT$106.50, and Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., increased by 0.48 percent to end at NT$2,085.00.
“The Taiex was also lifted by select raw material stocks today but as the tech sector is the major driver of the index, the gains posted by these old economy stocks were limited,” Tsai said.
Other sectors
Among the old economy stocks, China Steel Corp., the largest steelmaker in Taiwan, rose by 1.30 percent to close at NT$34.95, and Kao Hsing Chang Iron & Steel Corp. increased by 1.29 percent to end at NT$19.70.
In addition, textile brand Far Eastern New Century Corp. rose by 1.03 percent to close at NT$29.50, while Formosa Plastics Corp. ended unchanged at NT$105.50.
Shipping stocks, which had served as an anchor to stabilize the Taiex in the past few sessions, were mixed. Container cargo shipper Wan Hai Line Ltd. rose by 0.87 percent to close at NT$173.50, while Evergreen Marine Corp. ended unchanged at NT$129.00, and Yang Ming Marine Transport Corp. decreased by 0.44 percent to close at NT$112.00.
“Despite the gains on the U.S. markets Tuesday, volatility is possible down the road as investor sentiment remains clouded by fears of a Fed rate hike, which is expected to move the global markets,” Tsai said. “So, investors here had better remain alert over the U.S. January CPI data (due Thursday) for more clues about how the Fed will act.”
According to the TWSE, foreign institutional investors bought a net NT$10.41 billion worth of shares on the main board Wednesday.
Source: Focus Taiwan News Channel