Taipei, Aug. 19 (CNA) Shares in Taiwan closed higher Monday as investors were encouraged by the gains seen in U.S. markets at the end of last week, dealers said.
The bellwether electronics sector, and especially large cap semiconductor stocks led by contract chipmaker Taiwan Semiconductor Manufacturing Co., keyed the upturn after a 2.78 percent spike in the Philadelphia Semiconductor Index on Friday, they said.
The weighted index on the Taiwan Stock Exchange (TWSE), the Taiex, ended up 67.86 points, or 0.65 percent, at 10,488.75, after moving between 10,449.39 and 10,516.05. Turnover was NT$119.11 billion (US$3.79 billion).
The market opened up 0.27 percent in reaction to a 1.20 percent rise in the Dow Jones Industrial Average and a 1.67 percent rise in the tech-heavy Nasdaq on Friday as the 10-year treasury yield rebounded, dealers said.
Further buying momentum picked up in the middle of the morning, driven by support for semiconductor stocks based on the strong showing of the Philadelphia index.
"Taiwan's stock market remained highly tied to U.S. markets," Mega International Investment Services Corp. analyst Alex Huang said. "It was no surprise that the Taiex again followed the Dow to continue to rebound today."
On Friday, the Taiex gained 0.91 percent after having lost ground three of the previous four sessions, helped by a 0.39 percent rebound in the Dow.
"Large local semiconductor stocks such as TSMC got a boost from the spike in the Philadelphia Semiconductor Index to help the broader market move higher for the second consecutive session," Huang said.
"After the gains in the two sessions, I think the Taiex's rebound has been pretty solid and has made the market technically healthier," Huang said.
TSMC, the most heavily weighted stock in the local market, rose 0.80 percent to close at NT$252.50, with 24.04 million shares changing hands.
The gains posted by TSMC contributed 20 points to the increase in the Taiex and boosted the electronics sector by 1.03 percent and the semiconductor sub-index by 1.49 percent.
Also in the semiconductor sector, IC designer MediaTek Inc. soared 9.63 percent to close at NT$353.00 amid optimism over its efforts on 5G technology development, and IC packaging and testing services provider ASE Technology Holding Co. added 2.38 percent to end at NT$68.70.
During the session, flat panel stocks posted strong gains on speculation that their South Korean counterparts will cut production to keep product prices from falling, dealers said.
Among the gaining flat screen stocks, AU Optronics Corp. rose 5.12 percent to close at NT$7.80, and rival Innolux Corp. added 7.81 percent to end at NT$7.04.
The financial sector continued to benefit from bargain hunting and moved higher in line with the broader market, with Cathay Financial Holding Co. up 1.14 percent to close at NT$40.00, and Fubon Financial Holding Co. up 0.46 percent to end at NT$43.35.
In the old economy sector, which generally moved up, Formosa Plastics Corp. rose 0.99 percent to close at NT$92.00, and textile company Far Eastern New Century Corp. gained 0.88 percent to end at NT$28.60.
Food brand Uni-Presidential Enterprises Corp. fell 0.65 percent to close at NT$77.30.
"Today's buying also reflected hopes that the U.S. Federal Reserve will cut its key interest rates in September to lift liquidity, which is favored by stock markets," Huang said.
"But how far the upturn will go will depend on how Washington and Beijing sort out their trade spat. Any new leads from the issue are expected to move global financial markets," Huang said.
Despite Monday's gains in the index, foreign institutional investors were on the sell side, recording a net sell of NT$3.70 billion in shares on the exchange Monday, according to the TWSE.