The TAIEX ended the week up 2.7 percent at 8,843.84, buoyed by Thursday’s report that fourth-quarter economic growth expanded at a faster-than-expected rate of 6.92 percent, dealers said yesterday.
The benchmark index recovered from last week’s 8,609.86, led by financials, which rose 4.27 percent, Taiwan Stock Exchange data showed.
Domestic demand plays such as textiles and construction rose 3.5 percent, while export-oriented electronics climbed 1.17 percent, the data showed.
Foreign institutional investors bought a net NT$12.71 billion (US$432.2 million) in stocks, ending seven consecutive trading days of net selling, the exchange said.
“The termination of net selling by foreign investors led to the stock market’s uptrend,” Chang Shu-hui (張淑蕙), a fund manager at Prudential Financial Securities Investment Trust Enterprise Co (保德信投信), said in a research report.
Although net selling by foreign investors reached NT$78.2 billion in the seven trading days after the Lunar New Year break, they still have more than NT$370 billion in speculative capital parked in Taiwan, which could be spent on increasing their holdings of domestic shares in the future, Chang said.
The robust economic growth last year could also encourage investors to buy more shares, said Sunny Chung (鍾兆陽), a fund manager at Allianz Global Investors Taiwan Ltd (德盛安聯證券投信).
The economy expanded at a faster-than-expected pace in the second half of last year amid robust exports, bringing GDP growth last year to a 24-year high of 10.82 percent, the Directorate-General of Accounting, Budget and Statistics said on Thursday.
A continuing global economic recovery has kept the US stock market rising this year, with the Dow Jones Industrial Average hitting a two-and-a-half-year high of 12,318, which could also benefit the Taiwanese stock market, Chung said.
BNP Paribas Securities upgraded the Taiwanese stock market to “overweight” in its latest Asian equity research report, with an index target of 11,200 points.
Henry Chen (陳志恆), an investment research director at KBC Concord Asset Management Co (康和比聯投信), maintained his conservative view of the domestic stock market in the short term, saying electronics companies could continue to suffer from a stronger New Taiwan dollar this year, which would keep their share prices under pressure.
However, domestic demand stocks, such as travel, retail and department stores, could benefit from government policy adjustments, including proposals to raise salaries, as the administration gears up for the presidential election next year, Chen said.
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