Taipei, Shares in Taiwan closed higher Tuesday, extending momentum from a session earlier, led by the bellwether electronics sector, which continued an upturn in the wake of a strong showing by U.S. tech stocks overnight, dealers said.
Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, served as a driver to the electronics sector as well as the broader market, while buying spread to select market laggards such as smartphone camera lens supplier Largan Precision Co., which boosted the main board further, the dealers said.
The weighted index on the Taiwan Stock Exchange (TWSE) closed up 93.53 points, or 0.85 percent, at the day's high of 11,095.63, off a low of 11,014.87, on turnover of NT$130.46 billion (US$4.47 billion).
The market opened up 0.18 percent on the back of buying in the electronics sector, as investors ignored a 0.62 percent fall suffered by the Dow Jones Industrial Average but paid attention to a fresh high enjoyed by the tech-heavy NASDAQ index overnight, the dealers said.
Momentum accelerated, with buying in large-cap electronics stocks, in particular TSMC, Largan and DRAM chipmaker Nanya Technology Corp. vaulting the main board past the nearest technical resistance level at around 11,070 points, which helped the Taiex gain further to close at the day's high, they said.
"After the Taiex breached the 11,000-point mark yesterday on massive foreign institutional buying, local market sentiment has improved a lot," said Mega International Investment Services Corp. analyst Alex Huang.
"Investors here simply followed the lead of U.S. high-tech stocks, rushing to pick up electronics heavyweights throughout the session today," Huang said. "It is possible that foreign institutional investors, in particular passive mutual funds, stayed on the buy side during the trading session."
According to the TWSE, foreign institutional investors bought a net NT$8.62 billion-worth of shares on the main board Tuesday after a net buy of NT$12.2 billion a session earlier. Huang said large-cap electronics stocks remained the favorites of foreign institutional investors.
TSMC, the world's largest contract chipmaker, as well as the A11 processor for production of the latest iPhone, gained 1.97 percent to close at NT$259.00, with 33.71 million shares changing hands. Led by TSMC, the bellwether electronics sector ended up 1.32 percent and the semiconductor sub-index closed up 1.86 percent.
iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, added 0.95 percent to close at NT$95.20, on follow-through buying sparked by a greenlight issued by the Chinese authorities last week for subsidiary Foxconn Industrial Internet Ltd. to launch an IPO in Shanghai.
"Even better, some other Apple concept stocks played catch-up today to give an additional boost to the entire electronics sector, as many bargain hunters jumped onto the trading floor," Huang said, referring to Largan, which gained 2.28 percent to return to the NT$4,000 mark and close at NT$4,045.00.
In addition, due to high hopes of higher DRAM prices on a tight global supply, Nanya Technology soared 8.31 percent to close at NT$89.80. The buying also reflected an 8.76 percent rally posted by U.S. counterpart Micron Technology Inc. a day earlier.
However, since the electronics sector remained the mainstream of the local equity market and soaked up about 70 percent of the total turnover, non-high-tech stocks appeared sluggish during the session, Huang said.
In the non-high-tech sector, Cathay Financial Holding Co. fell 1.10 percent to close at NT$53.90, and Formosa Plastics Corp. lost 0.48 percent to end at NT$103.00, while food brand Uni-President Enterprises Corp. rose 0.29 percent to close at NT$69.80.
"Despite today's gains, it remains to be seen whether the Taiex will continue to stand above the 11,000-point mark, since it is possible that the main board will face strong selling as it moves closer to the next technical hurdle of 11,150 points," Huang said.
"Moreover, we have to watch closely whether foreign institutional investors will continue heavy buying," he added.
Source: Focus Taiwan News Channel