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Taiwan shares rebound by over 1%, driven by rising liquidity

11/28/2023 06:25 PM
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CNA file photo
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Taipei, Nov. 28 (CNA) Shares in Taiwan staged a strong technical rebound, rising more than 1 percent Tuesday following a slump the previous day, with buying increasing across the board, particularly in the bellwether electronics sector.

The latest gains were driven by rising liquidity, with a strong Taiwan dollar prompting foreign investors to move funds from U.S. dollar-denominated assets into the local equity market.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 203.83 points, or 1.19 percent, at 17,341.25 after moving between 17,145.20 and 17,360.38. Turnover totaled NT$293.63 billion (US$9.33 billion).

The market opened 0.08 percent up and moved in a narrow range in the early morning session in the wake of a lackluster performance in the U.S. markets, with the Dow Jones Industrial Average falling 0.16 percent and the tech-heavy Nasdaq index dropping 0.07 overnight.

"Look at the strength of the Taiwan dollar. I think the local main board got a boost from rising liquidity and falling U.S. yield bonds, which made investors more willing to take risks," Mega International Investment Services Corp. analyst Alex Huang said.

The benchmark 10-year U.S. treasury yield fell by 5 basis points to 4.429 percent overnight after weaker-than-expected new home sales.

"Buying was led by tech heavyweights, particularly Taiwan Semiconductor Manufacturing Co. (TSMC)," Huang said.

TSMC, the most heavily weighted stock in the local market, rose 1.23 percent to close at NT$575.00. TSMC's gains lifted the electronics index and the semiconductor sub-index by 1.28 percent and 1.36 percent, respectively, and contributed about 60 points to the Taiex rise.

The buying of TSMC shares spread to other semiconductor heavyweights, with dynamic random-access memory (DRAM) chip supplier Nanya Technology Corp. ending 4.85 percent up at NT$73.50, and smartphone IC designer MediaTek Inc., second to TSMC in terms of market value, up 1.18 percent to close at NT$942.00.

Meanwhile, Alchip Technologies Inc., an application-specific integrated circuit (ASIC) designer, soared 6.10 percent to end at NT$3,130.00.

"Judging from the strength enjoyed by these tech stocks, I think foreign institutional investors were on the buy side today, riding the waves of the higher value of the Taiwan dollar," Huang said.

According to the TWSE, foreign institutional investors bought a net NT$20 billion worth of shares on the main board Tuesday and the U.S. dollar dropped NT$0.102 to close at NT$31.468.

Bucking the upturn, United Microelectronics Corp., a smaller contract chipmaker, lost 0.91 percent to close at NT$49.05, and IC packaging and testing services provider ASE Technology Holding Co. ended down 0.40 percent at NT$125.50.

Also in the tech sector, iPhone assembler Hon Hai Precision Industry Co. rose 0.99 percent to close at NT$102.50, and PC brand Asustek Computer Inc. gained 2.25 percent to end at NT$385.50, largely during last-ditch buying.

"Many large-cap old economy stocks also steamed ahead. It is possible that buying came from these groups' major shareholders in a bid to lift share prices of their own stocks and dress up the books as the year is coming to an end," Huang said.

Among the stocks owned by the major conglomerates, Chung Hwa Pulp Corp. rose 3.00 percent to close at NT$22.35, and Yuen Foong Yu Consumer Products Co. gained 2.57 percent to end at NT$41.85, leading to the paper index moving higher by 1.17 percent.

Nan Ya Plastics Corp. added 1.33 percent to close at NT$68.60, and Formosa Chemicals & Fibre Corp. ended up 1.90 percent at NT$64.50.

Elsewhere in the old economy sector, Chung-Hsin Electric & Machinery Manufacturing Corp. rose 4.20 percent to close at NT$124.00, and Fortune Electric Co. gained 3.38 percent to end at NT$275.50 on the back of a plan for Taiwan Power Co. to upgrade the electricity grid network nationwide.

In contrast to the 2.25 percent increase on Monday, the biotech index lost 0.20 percent Tuesday as investors pocketed previous gains that had accumulated following a surge of respiratory illness in children in China.

Among biotech stocks, test kit supplier Panion & BF Biotech Inc. fell 4.08 percent to close at NT$117.50, and drug developer Chunghwa Chemical Synthesis & Biotech Co. lost 3.43 percent NT$59.20.

In the financial sector, which rose 0.72 percent, Fubon Financial Holding Co. increased 0.63 percent to close at NT$63.90, and Cathay Financial Holding Co. added 0.55 percent to end at NT$46.00.

"An uptrend of the Taiex could continue but the index will need to consolidate for some time in preparation for a successful challenge of stiff technical," Huang said.

"Investors should also be aware of the U.S. October personal consumption expenditure index, one of the critical barometers for the Fed's decision, which is due Thursday," Huang added.

(By Frances Huang)

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