Taipei: Shares in Taiwan surged more than 3 percent as contract chipmaker Taiwan Semiconductor Manufacturing Co. closed at a new high after the Financial Supervisory Commission (FSC) raised the investment ceiling for the stock by active exchange-traded funds (ETFs). The Taiex, the Taiwan Stock Exchange's benchmark index, ended up 1,218.25 points, or 3.23 percent, at 38,932.40 after moving between 37,862.65 and 38,989.94. Turnover totaled NT$1.03 trillion (US$32.53 billion).
According to Focus Taiwan, on Thursday, the FSC announced that investments made by active ETFs in any single stock accounting for more than 10 percent of total market value would be allowed to surpass the current cap of 10 percent of those funds' net assets, effective Friday. Currently, only TSMC accounts for over 10 percent of total market value, making it the sole beneficiary of the new rule when the market opened Friday.
The FSC stated that TSMC accounts for 44.3 percent of market value, ahead of power management solution provider Delta Electronics Inc.'s 3.48 percent and AI server and iPhone assembler Hon Hai Precision Industry Co.'s 2.54 percent. However, TSMC will still be restricted from exceeding 25 percent of any ETF's net assets.
"It was not surprising that investors rushed to pick up TSMC today, shrugging off geopolitical concerns in the Middle East," said Mega International Investment Services analyst Alex Huang. TSMC rose 5.05 percent to close at NT$2,185.00, contributing about 840 points to the Taiex's rise and sending the electronics index higher by 4.10 percent.
Other large cap stocks also moved higher in line with the Taiex's gains. Smartphone IC designer MediaTek Inc., recently a market laggard, soared 10 percent, the maximum daily increase, to end at NT$2,435.00. Delta Electronics rose 4.80 percent to close at NT$2,075.00, and IC packaging and testing services provider ASE Technology Holding Co. gained 6.78 percent to end at NT$496.00.
Bucking the upturn, Hon Hai fell 1.56 percent to close at NT$221.50. "With the tech sector under the market spotlight, non-tech stocks continued to lose their luster," Huang said. In the old economy sector, Formosa Plastics Corp. lost 1.57 percent to close at NT$50.20, and Formosa Chemicals and Fibre Corp. ended down 0.10 percent at NT$49.35. China Steel Corp., Taiwan's biggest steel maker, shed 0.78 percent to close at NT$19.00, and Tung Ho Steel Corp. fell 0.45 percent to end at NT$66.90.
In the financial sector, Fubon Financial Holding Co. lost 0.57 percent to close at NT$87.80, while Cathay Financial Holding Co. rose 0.13 percent to end at NT$74.90. "After recent significant gains, I think the local market will encounter major technical pullbacks as TSMC could see strong resistance around NT$2,300.00 despite sound fundamentals," Huang said.
According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$43.91 billion in shares on the exchange Friday.