TAIEX passes 9,000 mark
The TAIEX closed above 9,000 points yesterday, with strong increases seen in food and cement stocks, dealers said.
The weighted index rose 58.25 points, or 0.64 percent, to end at 9,035.48 on turnover of NT$124.025 billion (US$4.3 billion).
Food shares scored the biggest gains of the day, finishing up 2.63 percent, while cement stocks jumped 2.49 percent.
Analysts attributed the gains to the falling prices of raw materials because of an outflow of speculative funds, as well as strong demand created by public construction projects in Taiwan and China.
The financial sector rose 1.37 percent, textiles added 0.94 percent, paper and pulp shares gained 0.94 percent and the machinery and electronics sector closed 0.45 percent higher.
UMC sales edge lower
United Microelectronics Corp (UMC, 聯電), the world’s second biggest contract chipmaker, said sales edged lower last month from a month earlier because of the stronger New Taiwan dollar.
UMC’s sales were down 0.22 percent to NT$9.56 billion last month from NT$9.59 billion in March.
During the first fourth months of this year, the company accumulated NT$37.68 billion in revenues, up 4.57 percent from a year earlier.
UMC predicted that demand would weaken in the current quarter, which would drive its factory usage lower to 85 percent this quarter from 90 percent last quarter.
Private consumption surges
The nation’s private consumption may grow at its strongest pace in seven years at 3.94 percent this year, boosted by pay raises in the private sector and new government rules permitting individual travel by Chinese tourists, the Council for Economic Planning and -Development said yesterday.
Private consumption is expected to grow 4.98 percent in the first quarter of this year from a year earlier, making it one of the major drivers of domestic demand, the Directorate-General of Budget, Accounting and Statistics (DGBAS) data showed.
In addition, private consumption is increasingly focused on the entertainment and digital industries, an indication of increasing demand for high tech products, the agency said.
Put options recommended
Morgan Stanley is recommending put options on the New Taiwan dollar, South Korea’s KOSPI 200 and sovereign credit default swaps (CDS) on China and South Korea as the “cheapest” hedge against a potential “hard landing” in China.
Puts on the NT dollar are the “most cost efficient hedge” against a “low” probability slowdown in the Chinese economy of below 5 percent, while sovereign CDS is the “most liquid way of positioning” China credit risk via derivatives, analysts led by Viktor Hjort wrote in a report dated yesterday. Puts on the South Korean index replace the S&P/ASX 200 index as the “best equity hedge,” they wrote.
NT dollar rises 0.1 percent
The NT dollar rose following last week’s decline before the government reported that exports beat economists’ estimates last month.
“We’re seeing US dollar weakness after the US payroll numbers on Friday,” said Henry Lin (林弘立), a Taipei-based foreign-exchange trader at Taiwan Shin Kong Commercial Bank (新光銀行).
“Regional currencies were also supported by speculation China will let the yuan gain as it meets with the US in Washington,” Lin said.
The NT dollar strengthened 0.1 percent to NT$28.750 against its US counterpart, according to Taipei Forex Inc.