Shares rallied yesterday following overnight gains on Wall Street. The gains were led by financial, petrochemical and paper stocks.
The TAIEX rose 63.46 points, or 0.68 percent, to 9,354.41 on robust volume.
"There was healthy rotational buying today in financial and petrochemical stocks as technology names have risen a lot recently," HSBC Investments Service Taiwan fund manager Willie Shih said.
Shih said the increasing trading volume showed that the rally had not lost steam.
Approximately NT$233 billion (US$7.1 billion) worth of Taiwan stocks changed hands yesterday, an increase of 5.82 percent from the previous day's level, Taiwan Stock Exchange statistics showed.
SinoPac Securities (永豐金證券) assistant vice president Alvin Teng (鄧可欣) said that bullish prospects were being further bolstered by consensus among foreign and domestic investors that the government would introduce more market-friendly measures in the run-up to the parliamentary and presidential elections next year.
Last month alone, foreign investors injected a total of US$6.41 billion into the Taiwanese stock market, making it the third-highest monthly level on record, the Financial Supervisory Commission said yesterday.
With the continuing surge in share prices, foreign investors have continued to pump money into the market, the commission's Securities and Futures Bureau said. Foreign investors remitted US$1.13 billion into Taiwan in the first week of this month.
Since Taiwan opened to foreign institutional investors in the late 1990s, foreign investors have injected approximately US$143.42 billion, the bureau said.