Shares in Taiwan rose sharply Wednesday after a strong performance on U.S. markets overnight, dealers said.
The bellwether electronics sector led the rally, boosted by solid gains in semiconductor stocks in the United States on Tuesday, while the transportation and financial sectors mounted comebacks from recent slumps, they said.
The Taiex, the Taiwan Stock Exchange’s benchmark weighted index, ended up 240.77 points, or 1.50 percent, at 16,296.86, after moving between 16,172.80 and 16,316.58. Turnover totaled NT$234.09 billion (US$7.89 billion).
U.S. tech stock rally overnight
The market opened up 0.74 percent and maintained its momentum on interest in semiconductor heavyweights after the Philadelphia Semiconductor Index soared 5.01 percent and the tech-heavy Nasdaq index rose 2.76 percent in the U.S. overnight, dealers said.
The rally then spread to non-tech stocks, especially late in the trading session, to push the Taiex to the 16,300-point mark at the close, they said.
“Big tech stocks, especially in the semiconductor sector, have been hit hard recently by fears that rising interest rates would make them less attractive due to their relatively high valuations,” Concord Securities analyst Kerry Huang said.
“But now, with the U.S. Federal Reserve not appearing as hawkish on interest rates as the market had expected, bargain hunters are emerging to pick up tech stocks at home and on U.S. markets.”
Worries over an aggressive Fed diminished after Fed Chair Jerome Powell reiterated overnight that American central bank will not consider a 0.75 percent rate hike at its policymaking meetings in June and July.
TSMC
“TSMC (Taiwan Semiconductor Manufacturing Co.) continued to lead the local tech sector upwards” after its American depositary receipts (ADRs) jumped 3.22 percent on U.S. markets Tuesday, Huang said.
TSMC, the most heavily weighted stock in the local market, gained 1.51 percent to close at NT$538.00 after a foreign brokerage raised its target price for the stock to NT$912.00.
The company’s gains helped push the local electronics sector 1.32 percent higher and the semiconductor sub-index 1.40 percent higher.
In broader electronics sector
United Microelectronics Corp. (UMC), a smaller contract chipmaker, closed 1.60 percent higher at NT$50.90, following a 4.46 percent increase in its ADRs overnight.
Other semiconductor companies also posted gains.
Among them, application-specific IC (ASIC) designer Faraday Technology Corp. soared 5.10 percent to close at NT$268.00, power management IC designer Silergy Corp. gained 3.91 percent to end at NT$2,925.00, and smartphone IC designer MediaTek Inc. added 1.66 percent to close at NT$855.00.
Bucking the upturn, Alchip Technologies Ltd., another ASIC designer, ended unchanged at NT$949.00.
Transportation sector helped by China’s eased lockdowns
“Today’s surge in the Taiex also reflected high hopes that China’s move to ease lockdowns against COVID-19 infections will boost global demand and resolve a bottleneck in the world’s supply chains,” Huang said. “That optimism was seen among shipping stocks.”
The transportation sector, where the major cargo shippers are traded, rose 1.44 percent.
Evergreen Marine Corp., the largest container cargo shipper in Taiwan, rose 1.48 percent to close at NT$137.50, and rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. added 0.86 percent and 3.15 percent, respectively, to end at NT$117.50 and NT$147.50.
In addition, China Airlines rose 1.60 percent to close at NT$25.35, while EVA Airways fell 0.15 percent to end at NT$31.75.
Financials
After a fall of 0.45 percent on Tuesday, the financial sector staged a rebound of 2.87 percent on Wednesday. “But several insurance companies are faced with rising claims for COVID-19 policies they have sold, and I’m worried that will hit their bottom lines,” Huang said.
In the sector, Cathay Financial Holding Co. rose 2.85 percent to close at NT$54.10, Fubon Financial Holding Co. gained 3.41 percent to end at NT$63.70, and E. Sun Financial Holding Co. added 3.50 percent to close at NT$29.60.
In Taiwan, a financial holding firm owns banking, insurance and securities businesses.
Taiwan dollar gains on stock rally
“Judging by today’s gains, I think foreign institutional investors shifted to the buy side on the back of a stronger Taiwan dollar,” Huang said.
According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$11.19 billion in shares Wednesday after a net sell of NT$858 million on Tuesday.
The greenback lost NT$0.022 to close at NT$29.710 against the Taiwan dollar on Wednesday.
Source: Focus Taiwan News Channel