Taipei-The benchmark weighted index of the Taiwan Stock Exchange rose 22 percent in the Year of the Pig on the Lunar calendar because of strong buying by foreign institutional investors.
On Monday, the last trading session of the Year of the Pig, the Taiex rose 0.24 percent to 12,118.71 after moving in a narrow range amid caution ahead of the upcoming Lunar New Year holiday from Jan. 23 to Jan. 29.
Trading is expected to resume on Jan. 30 in the Year of the Rat, according to analysts.
In the Year of the Pig, in which trading started on Feb. 11, 2019, the Taiex rose by 2,186.45 points, or about 22 percent after the Year of the Dog from early 2018 to early 2019 saw the Taiex fall 488.83 points, or 4.69 percent.
Foreign institutional investors were net buyers of almost NT$200 billion (US$6.68 billion) in shares, concentrated heavily in large cap stocks in the electronics sector.
Among the gaining tech heavyweights, contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the Taiex, rose 50.65 percent in the Year of the Pig to close at NT$333.00 Monday.
"After soaring most of the year, TSMC shares fell into consolidation mode in the last few sessions," Mega International Investment Services Corp. analyst Alex Huang said.
"But because TSMC has given strong sales guidance for 2020, the stock could continue to trend higher after the Lunar New Year holiday to serve as a driver of the broader market."
At an investor conference held on Jan. 16, TSMC CEO C.C. Wei (???) predicted annual sales growth in the global pure foundry industry of 17 percent in 2020 and said TSMC would likely surpass that by "several percentage points."
"TSMC's consolidation was technical in nature and had nothing to do with its fundamentals," Huang said. "As long as foreign institutional investors keep buying into the stock, its upturn will continue and the broader market will follow suit."
As of Friday, foreign institutional investors held a 78.14 percent stake in TSMC, according to the Taiwan Stock Exchange Corp.
In a research note, a U.S. brokerage raised its target price on TSMC shares from NT$396 to NT$402, making it the first foreign brokerage to post a target price above NT$400 following the investor conference.
iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market capitalization, rose 31.86 percent in the Year of the Pig, and Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., added 31.61 percent.
Huang said Taiwan's market will be dictated in the near term by the earnings season in the U.S., where big tech companies including Apple Inc., will report their fourth quarter results and give guidance for the current quarter.
Apple's results will come out on Jan. 28, and Taiwan's market is expected to react after the holiday, Huang said.
"The market is widely anticipating that Apple will report satisfactory results, helping the Taiex push higher after the holiday," Huang said.
Source: Focus Taiwan News Channel