Shares rose yesterday on solid Wall Street gains and increased institutional buying of its chip shares.
The TAIEX rose 97.46 points, or 1.57 percent, to 6,298.86, its highest closing level in nearly two weeks, on turnover of NT$93.88 billion (US$2.93 billion).
Foreign investors yesterday renewed their interest in chip-foundry stocks, traders said, partly as a reaction to the Wall Street gains.
The local bourse's still relatively low valuation compared with other Asian stock markets also attracted investors, they said.
The tech sector led the market, putting on 2.56 percent as investors counted on a strong showing in the second half, traditionally the best for the high-tech sector in the run-up to the year-end holiday season.
Shares of Taiwan Semiconductor Manufacturing Co (
"The market is very positive regarding dynamic-random-access memory chips," said Henry Chen with Fubon Securities Corp (富邦證券).
Shares of memory-chipmakers also rose after spot prices of the semiconductor had their biggest weekly gain in 15 months.
Spot prices of the most widely used type of computer memory, the 256-megabit, double-data-rate dynamic random access memory (DRAM) chip, jumped 4.4 percent on Friday because of insufficient supply, according to Dramexchange.com, Asia's biggest spot market for computer memory chips.
That capped a 9.1 percent rise for the week, the biggest since the week ended April 9 last year.
The over-the-counter traded Powerchip Semiconductor Corp (
But Chen warned that the rally may not be sustainable due to high oil prices, which raise some companies' costs.
For chart-watchers, the index may have difficulty climbing above the 10-year moving average of 6,400, Chen said. He expects today's trading range to be 6,200-6,300, with turnover rising to NT$93.88 billion.
RSS