Taiwan shares soar amid eased concerns over Fed tightening

Shares in Taiwan moved sharply higher Monday on a technical rebound from last week's slump, with large cap tech and shipping stocks leading the upturn throughout the session, dealers said.

Interest in local stocks was sparked by the gains posted on U.S. markets at the end of last week as concerns that the U.S. Federal Reserve would tighten its monetary policy were eased after a hawkish Fed official softened his tone, dealers said.

The Taiex, the Taiwan Stock Exchange's (TWSE) benchmark weighted index, ended up 399.90 points, or 2.45 percent, at 16,741.84, after moving between 16,459.13 and 16,785.29. Turnover totaled NT$363.52 billion (US$13.01 billion).

The market opened up 0.71 percent and buying accelerated to push the Taiex above 16,700 points, after the Dow Jones Industrial Average rose 0.65 percent and the tech-heavy Nasdaq index gained 1.19 Friday in view of the Fed official's stance.

Dallas Federal Reserve President Robert Kaplan, among the most hawkish Fed officials on monetary policy, said Friday he could adjust his view if an escalation of the Delta variant materially affected economic growth.

Last week, the Taiex tumbled 640.17 points, or 3.77 percent, amid fears that the Fed would scale down its bond purchases later this year.

"The plunge on the Taiex seen last week resulted from the minutes of the Fed's last policymaking meeting held in July," Cathay Futures Consulting analyst Tsai Ming-han said. "But Kaplan's comments came at a time when the Delta variant is spreading worldwide.

"It seemed his view was more responsive to the current situation. The gains in the U.S., Taiwan, and other regional markets indicated investors at home and abroad reacted positively to his comment," he said, referring to gains on markets in Tokyo, Hong Kong and Shanghai on Monday.

Tsai said buying in the electronics sector was led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, which rose 2.54 percent to close at NT$566.00.

TSMC's gains led the electronics sector and the semiconductor sub-index to move higher by 2.50 percent and 3.00 percent, respectively.

Among other semiconductor stocks, United Microelectronics Corp., a smaller contract chipmaker, rose 5.21 percent to end at NT$58.60, and IC packaging and testing services provider ASE Technology Holding Co. gained 4.31 percent to close at NT$121.00.

IC designer MediaTek Inc. closed 4.35 percent higher at NT$911.00.

Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. rose 2.87 percent to close at NT$107.50 and power management solutions provider Delta Electronics Inc. closed 2.66 percent higher at NT$270.00.

"The shipping industry had taken a beating in recent sessions. Today shipping stocks made a comeback, pushing up the Taiex further," Tsai said.

The transportation sector, in which many major shipping stocks are traded, rose 7.99 percent, helped by the Cabinet's approval of a plan last week to extend a transaction tax discount for day trading for another three years after it expires at the end of this year.

Day traders, who buy and sell the same stock in a single day, have typically favored shipping stocks. Among them Evergreen Marine Corp. rose 8.68 percent to close at NT$144.00, and rival Wan Hai Lines Ltd. soared 10 percent, the maximum daily increase, to end at NT$248.00.

Bulk cargo shipper U-Ming Marine Transport Co. also jumped 10 percent to close at NT$70.20.

Elsewhere in the old economy sector, Formosa Plastics Corp. rose 2.30 percent to end at NT$98.00, and Nan Ya Plastics Corp. gained 2.08 percent to close at NT$83.60 after international crude oil prices snapped a seven session losing streak overnight.

In the financial sector, which rose 1.23 percent, Cathay Financial Holding Co. gained 2.61 percent to end at NT$55.10, and Fubon Financial Holding Co. added 3.27 percent to close at NT$79.00, while Mega Financial Holding Co. closed 1.27 percent lower at NT$31.05.

"Despite the significant gains in the Taiex today, turnover failed to top NT$405 billion, the daily average over the past 20 sessions, indicating many investors remained reluctant to chase prices," Tsai said.

"Investors are still waiting for more clues about the Fed's next move."

According to the TWSE, foreign institutional investors bought a net NT$14.20 billion in shares on the market Monday.

Source: Focus Taiwan News Channel