Taiwan shares soar almost 1.6% amid eased fears over U.S. bank woes

Taipei, March 22 (CNA) Shares in Taiwan moved sharply higher by almost 1.6 percent Wednesday in the wake of a rally on the U.S. markets following a vow by Treasury Secretary Janet Yellen that Washington would guarantee bank deposits.

Buying emerged in local semiconductor heavyweights with contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) in focus, leading to gains across the main board.

Meanwhile, the financial sector also attracted strong bargain hunting after being hit by the recent collapse of the Silicon Valley Bank and Signature Bank in the United States.

The Taiex, the Taiwan Stock Exchange's (TWSE) weighted index, ended up 247.01 points, or 1.59 percent, at the day's high of 15,760.46 after coming off a low of 15,535.17. Turnover totaled NT$241.87 billion (US$7.93 billion).

The market opened up 0.14 percent and buying soon accelerated as investors rushed to pick up TSMC and other semiconductor stocks by taking cues from a 0.98 percent increase on the Dow Jones Industrial Average, and a 1.58 percent rise on the tech-heavy Nasdaq index overnight after Yellen spoke.

With the Taiex jumping over the 20-day moving average of 15,560 points in the early morning session, the main board steamed ahead, and a rebound staged by the financial sector gave additional support to the broader market that continued into the end of the trading session.

"Yellen's assurance was very important to the global financial markets so investors at home and abroad appeared more willing to take risks, chasing equity prices," Hua Nan Securities analyst Kevin Su said.

Speaking in the American Bankers Association, Yellen said financial regulators have taken steps to backstop bank deposits and are willing to continue to do so, adding: "The situation is stabilizing and the U.S. banking system remains sound."

In addition, the market has widely bet that the U.S. Federal Reserve will raise its key interest rates by only 25 basis points, instead of 50 basis points, after wrapping up the two-day policymaking meeting early Thursday morning Taipei time, Su added.

"I think foreign institutional investors returned to the local trading floor today and that's why TSMC was highlighted by strong buying to lead the rally on the local main board," Su said.

According to the TWSE, foreign institutional investors bought a net NT$26.26 billion on the main board Wednesday.

After a 2.73 percent surge in its American depositary receipts (ADRs) on the U.S. market overnight, TSMC, the most heavily weighted stock in the local market, rose 3.09 percent to close at the day's high of NT$533.00. TSMC's gains contributed about 130 points to the Taiex's rise and pushed up the electronics index and semiconductor subindex by 1.96 percent and 2.55 percent, respectively.

Among other semiconductor heavyweights, TSMC's application-specific integrated circuit (ASIC) design subsidiary Global Unichip Corp. gained 3.11 percent to end at NT$1,160.00, IC packaging and testing services provider ASE Technology Holding Co. rose 1.87 percent to close at NT$109.00, and United Microelectronics Corp., a smaller contract chipmaker, ended up 1.33 percent at NT$53.50.

While the semiconductor industry drew most of the market attention, other electronics stocks seemed to largely be marginalized with iPhone assembler Hon Hai Precision Industry Co. closing unchanged at NT$103.50, and Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc. rising only 0.88 percent to end at NT$2,300.00.

Financial and other sectors

"The financial sector attracted bargain hunters after recent losses caused by bank financial troubles. Today, Yellen's remarks simply prompted investors to lock in bargains among financial stocks," Su said.

In the financial sector, which rose 1.46 percent, E. Sun Financial Holding Co. rose 2.09 percent to close at NT$24.45, Fubon Financial Holding Co. grew 1.63 percent to end at NT$56.20, Mega Financial Holding Co. gained 1.55 percent to close at NT$32.70, and Cathay Financial Holding Co. ended up 1.47 percent at NT$41.35.

Elsewhere, local suppliers of auto parts used in electric vehicles also moved higher after Tesla shares soared 7.8 percent overnight after Moody's upgraded its credit ratings, dealers said. Among them, Hota Industrial Manufacturing Co. rose 1.55 percent to close at NT$72.20, and BizLink Holding Inc. gained 1.28 percent to end at NT$276.00.

In addition, renewable energy-related stocks got a boost on hopes of rising demand for green power, with Teco Electric & Machinery Co. rising 4.55 percent to close at NT$37.90 and Luxe Green Energy Technology Co. growing 1.18 percent to end at NT$30.10.

"After the Taiex stands above the 20-day moving average, the main board is expected to challenge 15,879 points, the intraday high on March 7, soon," Su said.

"But, investors should keep a close eye on what the Fed will say after the current meeting for more clues about the American bank's next move," Su added.