Taipei, Jan. 12 (CNA) Shares in Taiwan closed above the 9,400 point mark on Thursday as buying in large-cap stocks almost across the board helped the weighted index jump over technical hurdles ahead of that level, dealers said.
A stronger Taiwan dollar prompted foreign investors to move funds into the local market and that liquidity drove the strong showing in equity prices throughout the session, they said.
The weighted index on the Taiwan Stock Exchange (TWSE) closed up 64.44 points, or 0.69 percent, at 9,410.18, after moving between 9,356.12 and 9,430.58, on turnover of NT$75.19 billion (US$2.37 billion).
The market opened up 10.56 points in response to gains on Wall Street, where the Dow Jones Industrial Average closed up 0.50 percent and the S&P 500 index ended 0.28 percent higher overnight, dealers said.
Momentum on the local main board accelerated with foreign fund inflows encouraging investors to pick up more local equities, in particular in the bellwether electronics sector, led by contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電), further pushing up the index by the end of the trading session, they said.
"The strength of the Taiwan dollar indicated more foreign fund inflows as foreign investors took their cues from a higher Wall Street overnight to buy into Taiwanese shares in a bid to catch-up," Xincheng International Investment Consultant Analyst Chang Chih-cheng said.
The U.S. dollar closed down NT$0.155 at NT$31.780 against the Taiwan dollar, marking the third consecutive session in which the greenback weakened on the local foreign exchange market.
Chang said that while the U.S. Federal Reserve has resumed an interest rate hike cycle, following the latest rate increase in mid-December the market does not expect the next increase until June, with the U.S. central bank set to tighten monetary policy gradually.
"Judging from the gains posted by local market heavyweights, I think foreign institutional investors recorded large net purchases. That's why the weighted index was able to close above 9,400 points today," Chang said.
According to the TWSE, foreign institutional investors bought a net NT$10.44 billion worth of shares on the main board on Thursday.
The electronics sector closed up 0.77 percent and the semiconductor sub-index ended the day 1.16 percent higher after TSMC, the most heavily weighted stock on the local market, rose 1.37 percent to close at NT$184.50, with 41.13 million shares changing hands.
Also in the high-tech sector, shares in Largan Precision Co. (大立光), a smartphone camera lens supplier to Apple Inc., gained 1.68 percent finishing the day at NT$4,240.00 to remain the most expensive stock in Taiwan, while PC brand Asustek Computer Inc. (華碩) added 1.28 percent to close at NT$276.00.
In the non-high tech sector, shares in Yuanta Financial Holding Co. (元大金) rose 2.47 percent to end at NT$12.45,and Mega Financial Holding Co. (兆豐金) gained 0.84 percent to close at NT$23.90 on bargain hunting.
On the back of a rebound in crude oil prices overnight, shares in Formosa Plastics Corp. (台塑) rose 1.68 percent to end at NT$90.80 and Nan Ya Plastics Corp. (南亞) added 1.38 percent to close at NT$73.40.
"How the local equity market performs will depend on foreign institutional investors' attitudes," Chang said. "Whether foreign investors will continue to buy will be determined by fluctuations in the greenback."
(By Frances Huang)