Taipei, Nov. 4 (CNA) Shares in Taiwan moved up sharply Monday to end above the 11,500 point mark, as market sentiment was boosted by hopes that the United States and China will sign a trade deal soon, dealers said.
Buying focused on the bellwether electronics sector, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), a major supplier to Apple Inc., amid optimism about its lead in technology development, dealers said.
Other large cap tech stocks in the Apple supply chain, in particular iPhone assembler Hon Hai Precision Industry Co., also attracted bargain hunting on the back of better than expected sales of the new iPhone 11 series, which helped push up the broader market, dealers said.
The weighted index on the Taiwan Stock Exchange (Taiex) ended up 157.32 points, or 1.38 percent, at 11,556.85, after moving between 11,451.72 and 11,559.07. Turnover totaled NT$156.60 billion (US$5.15 billion) during the session.
The market opened up 0.46 percent on follow-through buying from the previous session, when the Taiex closed up 0.36 percent, as investors were encouraged by the strong gains on the U.S. markets, dealers said. On Friday, the Dow Jones Industrial Average closed up 1.11 percent and the tech-heavy Nasdaq index ended up 1.13 percent on positive trade leads, dealers said.
On Friday, U.S. Commerce Secretary Wilbur Ross said a phase one trade agreement between the U.S. and China could be signed in one of several locations, including Iowa, Alaska, Hawaii or somewhere in China, following the cancelation of the APEC summit that was scheduled to begin Nov. 17 in Chile where U.S. President Donald Trump and Chinese President Xi Jinping were expected to ink the deal.
In addition, Ross said on Sunday that licenses will be granted very shortly for U.S. companies to sell products to Chinese telecom equipment giant Huawei Technologies Inc.
Amid optimism over lessening trade tensions between the U.S. and China, the Taiex soared past the technical resistance point of 11,500 Monday, with TSMC making a strong showing and other tech heavyweights as well as large old economy stocks helping to drive the gains.
"There have been encouraging signs on global trade issues," Concord Securities analyst Kerry Huang said, adding that other major regional markets such as Shanghai, Hong Kong and Seoul also showed gains on such positive leads.
"With foreign investors willing to take risks and still moving funds into the region, the regional equity markets are awash in liquidity," Huang said. "The local main board's gains were largely liquidity-driven."
According to Taiex data, foreign institutional investors bought a net NT$14.69 billion worth of shares on the main board Monday after a net buy of NT$8.28 billion in the previous session.
Huang said TSMC was one of the stocks to benefit from the high liquidity.
"The strong buying also reflected optimism about the company's bottom line based on its lead in technology development," he said
TSMC, the most heavily weighted stock on the local market, rose 2.68 percent to close at NT$307.00, with 44.68 million shares changing hands, and its market capitalization hit a new record of NT$7.96 trillion.
The gains by TSMC contributed about 80 points to the Taiex and pushed up the electronics sector and the semiconductor sub-index by 1.82 percent and 2.14 percent, respectively.
Huang said buying also focused on select tech stocks with relatively low valuations, with Hon Hai, the second largest stock in terms of market cap, soaring 4.95 percent to end at NT$89.00.
Also in the Apple supply chain, smartphone camera lens maker Largan Precision Co., rose 2.47 percent to close at NT$4,570.00, and metal casing producer Catcher Technology Co. gained 6.23 percent to end at NT$281.50.
Huang said bargain hunters also rushed to pick up old economy heavyweights, with food brand Uni-President Enterprises Corp. closing up 2.96 percent at NT$76.40, and Formosa Chemicals & Fibre Corp. gaining 1.24 percent to end at NT$90.10.
In the financial sector, which closed up 0.94 percent, Fubon Financial Holding Co. rose 0.90 percent to end at NT$44.95, and Cathay Financial Holding Co. finished 2.12 percent higher at NT$40.95.
"With today's solid upturn, the local main board has become technically healthier, so the Taiex could challenge the next technical resistance at around 11,800 points soon," Huang said.