Taipei-- Shares in Taiwan closed above the 9,700-point mark Monday in a liquidity-driven session as market sentiment was boosted by record-breaking trading sessions on Wall Street at the end of last week, dealers said.
Buying in the bellwether electronics sector drove Monday's gains, led by contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???), and interest in major petrochemical stocks pushed the broader market even higher, they said.
The weighted index on the Taiwan Stock Exchange ended up 44.73 points, or 0.46 percent, at 9,710.32, after moving between 9,681.10 and 9,711.43, on turnover of NT$99.23 billion (US$3.20 billion).
The market opened up 0.26 percent and quickly breached 9,700 points in reaction to the Dow Jones Industrial Average and S and P 500 index closing at record highs on Friday after President Donald Trump said his administration will propose tax cuts, dealers said.
Large cap stocks such as TSMC and Formosa Plastics Corp. (??), continued to move higher, lending support to the broader market throughout the session to help the weighted index close above 9,700 points, they said.
"Wall Street remained solid as investors seemed to have high hopes for a Trump tax cut plan," securities analyst Vickie Hsieh said.
The White House has said that Trump is planning to announce the most ambitious tax reform plan since the Ronald Reagan administration in the next few weeks.
"In addition to the support from the U.S. market, the stock market has been boosted by continued fund inflows. Ample liquidity simply drove the local index higher to overcome technical resistance ahead of 9,700 points," Hsieh said.
Hsieh said TSMC, the most heavily weighted stock in the local market, continued to anchor the current rally.
It closed up 1.08 percent at NT$187.50 with 25.12 million shares changing hands, helping the electronics sector finish 0.62 percent higher and the semiconductor sub-index 1.06 percent higher.
"Investors expect that the chip maker will dole out a fat cash dividend for 2016 so they rushed to buy into the stock today," Hsieh said.
The chip maker has scheduled a board meeting for Tuesday to discuss its dividend policy, and the market has widely anticipated that it will distribute a cash dividend that exceeds the cash dividend of NT$6 per share it issued in 2015.
Also in the electronics sector, Hon Hai Precision Industry Co. (??), the world's largest contract electronics maker, gained 0.90 percent to close at NT$89.90 on reports that it has received rush orders from smartphone brands in the Android camp.
Among rising old economy stocks, Formosa Plastics Corp. (??) rose 0.54 percent to end at NT$93.00, Formosa Chemicals and Fibre Corp. (??) added 0.71 percent to close at NT$99.70, and Nan Ya Plastics Corp. (??) gained 1.17 percent to end at NT$78.10 on higher product prices.
"Judging from the gains enjoyed by these large cap stocks, I think foreign institutional investors stood on the buy side today," Hsieh said. "If Wall Street keeps going up, foreign institutional buying in local equities could continue."
According to the TWSE, foreign institutional investors bought a net NT$4.44 billion in shares on Taiwan's market on Monday.
Source: Focus Taiwan News Channel