Shares in Taiwan moved sharply higher Monday as buying emerged amid eased fears over a rate hike, after the U.S. Federal Reserve chair struck a dovish tone on monetary policy at a meeting of global central bankers at the end of last week, dealers said.
While interest was seen almost across the board, late session buying was more apparent in the financial sector and the bellwether electronics sector, pushing up the main board close to the 17,400 point mark by the end of the session, they added.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 186.59 points, or 1.08 percent, at the day's high of 17,396.52 after coming off a low of 17,244.62. Turnover totaled NT$269.49 billion (US$9.69 billion).
The market opened up 0.20 percent and soon breached 17,300 points with investors encouraged to jump onto the trading floor by a rally on U.S. markets, where the S&P 500 index and the tech-heavy Nasdaq index hit all-time highs on Friday after a speech by Fed Chair Jerome Powell, dealers said.
Buying continued for the rest of the session and turned particularly strong in the late trading session with financial and tech stocks in focus, pushing the Taiex over the 60-day moving average of around 17,365 points and even higher, dealers added.
"Powell's dovish tone did assuage worries among many investors at home and abroad about a rate hike cycle at a time when the Fed is prepared to scale down its asset purchases," Cathay Futures Consulting analyst Tsai Ming-han said.
In a speech at the annual central banker symposium in Jackson Hole, Wyoming, Powell said the timing and the pace of the downsizing of asset purchases by the Fed "will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test."
"As such, it is not necessary for foreign investors to move their funds back anytime soon, and liquidity levels are expected to remain high on the local equity market," Tsai said. "The Taiex is still dictated by rotational buying amid ample funds."
Tsai said the financial sector continued its momentum from a session earlier on rotational buying with large cap stocks leading the uptrend in the wake of their improving bottom lines.
In the financial sector, which rose 1.76 percent, shares in Cathay Financial Holding Co. rose 3.12 percent to close at NT$59.50, and Fubon Financial Holding Co. gained 1.56 percent to end at NT$84.80.
In the first half of this year, Cathay Financial and Fubon Financial enjoyed a 180 percent and 135 percent year-on-year increase in net profit, respectively, with earnings per share at NT$8.29 and NT$6.65.
Among other gaining financial stocks, Mega Financial Holding Co. rose 1.41 percent to close at NT$32.45, and Taishin Financial Holding Co. soared 6.52 percent to end at NT$19.60.
Dealers said the electronics sector also drove the Taiex higher with the sub-index rising 1.08 percent to the day's high of 822.78 on the back of late session buying triggered by Powell's remarks. The semiconductor sub-index even rose 1.27 percent.
Among the rising semiconductor stocks, contract chipmaker Taiwan Semiconductor Manufacturing Co., the most heavily weighted stock on the local market, rose 1.00 percent to close at the day's high of NT$605.00, integrated circuit designer MediaTek Inc. also ended at the day's high of NT$912.00, up 1.79 percent, and IC packaging, and testing services provider ASE Technology Holding Co. added 1.57 percent to close at NT$129.00.
United Microelectronics Corp., a smaller contract chipmaker, gained 1.78 percent to end at NT$62.80 after the company said more and more of its IC design clients are signing longer agreements to secure supply amid the current global shortage.
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. rose 0.93 percent to close at the day's high of NT$109.00, while Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., fell 0.95 percent to end at NT$2,605.00.
The petrochemical sector rose 0.96 percent in the wake of higher international crude oil prices as Hurricane Ida forced the shutdown of more than 95 percent of oil production in the Gulf of Mexico. Shares in Formosa Petrochemical Corp. rose 2.28 percent to close at NT$98.50, and Formosa Plastics Corp. gained 1.99 percent to end at NT$102.50.
"Despite the gains on the Taiex, turnover remained below the NT$300 billion mark, indicating that many investors stayed on the sidelines," Tsai said. "It is possible the main board will consolidate for some time unless turnover expands to top the average of NT$365 billion over the past 20 trading sessions."
According to the TWSE, foreign institutional investors bought a net NT$21.23 billion worth of shares on the main board Monday.
Source: Focus Taiwan News Channel