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Taiwan shares end up over 100 points, pass 10,200 point mark

2019/02/20 18:13

CNA file photo

Taipei, Feb. 20 (CNA) Shares in Taiwan moved sharply higher Wednesday, up more than 100 points, to breach the 10,200 point mark, with the bellwether electronics sector driving the upturn, dealers said.

Buying in large cap stocks appeared solid, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), which announced on Tuesday a proposal to issue a NT$10 (US$0.32) cash dividend per share, they said.

Market sentiment also improved as more and more investors turn upbeat about a possible deal between the United States and China to resolve their trade disputes, with high-level trade talks scheduled to open later in the week, they said.

The weighted index on the Taiwan Stock Exchange (TWSE) or the Taiex closed up 120.20 points, or 1.18 percent, at the day's high of 10,272.46, off an early low of 10,181.94, on turnover of NT$131.99 billion (US$4.29 billion).

The market opened up 0.29 percent as the electronics sector led the upturn, and buying accelerated with a boost from TSMC, the most heavily weighted stock in the local market, as investors were encouraged by the chipmaker's cash dividend proposal, dealers said.

Momentum on the broader market continued as buying spread to other tech heavyweights such as smartphone camera lens supplier Largan Precision Co., as well as old economy and financial stocks, pushing the Taiex over the 10,200 point mark by the end of the session, they said.

"It seems that investors were amazed by TSMC's cash dividend proposal," Mega International Investment Services Corp. analyst Alex Huang said, "As they were looking to pocket NT$10 for each TSMC share they own this year, they rushed to pick up the stock soon after the local equity market opened."

In a statement released Tuesday, TSMC said it has proposed issuing a cash dividend of NT$10 per share in two stages: NT$8 in July and NT$2 in the fourth quarter of the year, adding it will start to issue dividends on a quarterly basis instead of the current annual basis.

The NT$8 cash dividend is based on the chipmaker's earnings for 2018, when it posted a net profit of NT$351.13 billion, or NT$13.54 per share. The NT$2 is planned for its earnings for the first quarter of this year.

If approved by shareholders in June, the NT$8 cash dividend will equal the figure TSMC distributed for earnings in 2017 even though its 2018 earnings hit a new high. The market had previously expected a cash dividend of NT$9 per share.

"The NT$2 cash dividend planned for first quarter earnings indicates TSMC will rake in more than NT$2 in earnings per share, which will be good in a slow season for the global semiconductor industry," Huang said.

The gains posted by TSMC boosted the Taiex by about 55 points with the bellwether electronics sector closing up 1.57 percent and the semiconductor sub-index ending 2.03 percent higher.

Among other gaining tech stocks, shares in Largan gained 2.89 percent to close at NT$4,095.00, and iPhone assembler Hon Hai Precision Industry Co. added 1.67 percent to end at NT$73.20. Integrated circuit designer MediaTek Inc. rose 2.20 percent to close at NT$255.50.

"Optimism over a possible trade deal between Washington and Beijing led buying to go beyond the tech sector," Huang said, adding that gains posted by other regional markets such as Shanghai, Shenzhen and Seoul also reflected such an upbeat mood.

Shares in President Chain Store Corp., which operates the 7-Eleven convenience store chain in Taiwan, rose 1.92 percent to close at NT$318.00, and Hotai Motor Co., the local sales agent for Japan's Toyota Motor Corp., gained 4.72 percent to end at NT$288.50.

In the financial sector, E. Sun Financial Holding Co. rose 0.93 percent to close at NT$21.80, and Cathay Financial Holding Co. added 1.23 percent to end at NT$45.15.

"The market has high hopes that the U.S. and China will sign a memorandum of understanding to deal with their trade disputes as Chinese deputy premier Liu He (劉鶴) will attend the upcoming high-level meeting," Huang said.

According to the TWSE, foreign institutional investors bought a net NT$10.8 billion worth of shares on the main board Wednesday.

(By Frances Huang)Enditem/AW