Taipei, Dec. 13 (CNA) Shares in Taiwan extended their momentum from a session earlier to close above 11,900 points Friday, with buying sparked by optimism over a possible trade deal between the United States and China, dealers said.
Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) continued to serve as an anchor for the bellwether electronics sector as well as the local main board throughout the trading session, as more and more foreign funds entered Taiwan to pick up the biggest stock here in terms of market capitalization, the dealers added.
The financial sector, which has been lagging in the local equity market, played catch-up, lending additional support to the broader market amid improving market sentiment toward global trade, the dealers said.
The weighted index on the Taiwan Stock Exchange (TWSE), or Taiex, ended up 91.31 points, or 0.77 percent, at 11,927.73, after moving between 11,913.02 and 11,990.78, on turnover of NT$170.33 billion (US$5.64 billion).
The market opened up 0.86 percent to breach 11,900 points in the wake of gains posted in U.S. markets, where the S&P 500 index closed up 0.9 percent to hit a new high and the Dow Jones Industrial Average ended up 0.8 percent on expectations that Washington and Beijing will ink a phase-one agreement soon, the dealers said.
The hopes have been raised by news reports that U.S. negotiators are offering to cancel planned tariffs on US$156 billion-worth of Chinese goods and to reduce existing levies on US$360 billion-worth of Chinese merchandise by up to 50 percent, while China will increase purchases of agricultural goods from the U.S.
The strength of the local main board continued, led largely by TSMC, until the gains were capped to some extent by the end of the trading session as some investors locked in their gains, but the index still managed to stand above 11,900 points by the end of the session, the dealers said.
"The buying reflected an upbeat mood about the global trade issue," Ta Chan Securities Investment Consulting analyst Jerry Chen said.
"Judging from the news reports, the U.S.-China deal could be announced sometime today or tomorrow, since the deadline for the new tariffs on US$156 billion-worth of Chinese goods has been set at Dec. 15."
After a rally Thursday, futures in the U.S. markets continued to rise, pointing to a good start on the spot markets Friday, Chen said. "The gains in futures in the U.S. markets further boosted sentiment here," he said.
Chen said that TSMC, the most heavily weighted stock in the local market, led the local main board to move sharply higher by 2.26 percent to close at a high of NT$339.00, with 58.08 million shares changing hands.
TSMC's gains contributed an increase of more than 70 points to the Taiex and boosted the bellwether electronics sector by 1.04 percent.
"With more and more foreign institutional investors moving their funds into Taiwan, TSMC was their top pick," Chen said.
According to the TWSE, foreign institutional investors bought a net NT$15.94 billion-worth of shares on the main board Friday after a net buy of NT$9.43 billion the previous day.
"However, due to TSMC's heavy weighting, the stock was the major contributor to today's gains, so the gains were uneven, with other large-cap stocks, in particular in the old economy sector, appearing lackluster," Chen said.
Also in the high-tech sector, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market cap, closed unchanged at NT$91.00 off a high of NT$92.00, while Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., rose 0.73 percent to end at NT$4,840.00.
In the mixed old economy sector, China Steel Corp., the largest steel maker in Taiwan, rose 1.07 percent to close at NT$23.70 on news that Chinese steel makers have been hiking product prices, and Taiwan Cement Corp. added 0.59 percent to end at NT$42.55, while Formosa Plastics Corp. fell 0.10 percent to close at NT$96.80 and food brand Uni-President Enterprises Corp. ended unchanged at NT$72.50.
In the financial sector, which closed up 0.94 percent on bargain hunting, Fubon Financial Holding Co. rose 2.39 percent to end at NT$47.15, CTBC Financial Holding Co. added 1.58 percent to close at NT$22.50 and Cathay Financial Holding Co. gained 1.06 percent to end at NT$42.90.
"The local main board has posted significant gains in the past few sessions. I think the Taiex could face a technical pullback soon," Chen said. "But on the back of ample liquidity, the Taiex is likely to see strong support at around 11,700 points if any major corrections occur," he added.
This week, the Taiex rose 318.09 points, or 2.74 percent, with a foreign institutional net buy of NT$14.98 billion.