Taipei, Taiwan shares rebounded Tuesday morning, moving more than 100 points higher, after a strong showing in United States markets fueled by reduced fears of a looming trade war, dealers said.
The bellwether electronics sector led the upturn with contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, among the stocks targeted after U.S. tech stocks posted gains, they said.
As of 11:36 a.m., the weighted index on the Taiwan Stock Exchange, the Taiex, had risen 112.61 points, or 1.06 percent, to 10,755.51 on turnover of NT$70.89 billion (US$2.07 billion).
The Taiex opened up 68.25 points and continued upwards, reflecting the 1.37 percent rise in the Dow Jones Industrial Average and a 1 percent rise in the tech-heavy Nasdaq in the United States on Monday.
Investors in the U.S. were more bullish after U.S. President Donald Trump tweeted: "Tariffs on steel and aluminum will only come off if new & fair NAFTA (North American Free Trade Agreement) agreement is signed."
They interpreted that to mean that the tariffs are simply a way to force Canada and Mexico to sign a fair trade agreement, dealers said.
"So, Wall Street was happy to steam ahead yesterday," MasterLink Securities analyst Tom Tang said.
"Taiwan's market closely follows the U.S. market, so it was no surprise that Taiwan stocks rebounded today. I don't think foreign institutional investors will dump Taiwanese stocks today as they did yesterday."
Foreign institutional investors sold a net NT$10.21 billion in shares on the main exchange Monday after a net sell of NT$20.28 billion seen last week, according to the TWSE.
Tang said TSMC served as a driver of the broader market's rebound, up 2.48 percent at NT$247.50 as of 11:36 a.m. after its American depositary receipts rose 1.12 percent overnight.
"TSMC hit NT$248 at one point this morning but came off the high to some extent due to stiff technical resistance," Tang said.
"If foreign institutional investors resume large purchases of TSMC to help the stock overcome the technical resistance, the stock could make a real breakthrough and the broader market will follow."
Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, had added 1.15 percent to NT$88.00.
Catcher Technology Co., which supplies metal casings to Apple Inc. and others, had gained 4.43 percent to NT$365.00 on the back of a proposed NT$12 cash dividend per share for its 2017 earnings.
The steel sector staged a rebound, rising 0.30 percent as of 11:36 a.m., after sliding 2.03 percent on Monday because of Trump's tariff plan.
China Steel Corp., the largest steel maker in Taiwan, was unchanged, however, at NT$23.60, while Tung Ho Steel Corp. had lost 0.82 percent to NT$24.15.
"But it is too early to say whether Wall Street has really stabilized as a rate hike cycle by the Federal Reserve this year remains a concern," Tang said.
Source: Focus Taiwan News Channel