The TAIEX surged 3.25 percent, or 243.2 points, to close at 7,736.32 yesterday following an overnight rally on Wall Street, with large-cap stocks leading the rebound.
Trading remained heavy for the fourth consecutive trading day, with turnover totaling NT$178.58 billion (US$6.12 billion) yesterday, Taiwan Stock Exchange data showed.
Foreign investors’ net sales amounted to NT$30.17 billion, increasing for the seventh straight trading day, while purchases by government-run funds and state-owned banks offset heavy selling pressure created by foreign investors, a dealer told the Taipei Times.
“The buying momentum was mostly focused on large-cap technology stocks, while the financial sector also played an important role in leading the benchmark index’s rise,” said the dealer, who declined to be named.
HTC Corp (宏達電), the world’s No. 5 smartphone brand, closed up 4.33 percent at NT$820, while Fubon Financial Holding Co (富邦金控), the nation’s most profitable financial service provider, surged 5.36 percent to close at NT$45.25.
These large-cap stocks led the electronics sector to increase 3.35 percent, while the financial sector surged 4.68 percent, data showed.
Before yesterday’s rebound, the TAIEX had lost more than 13 percent this month amid concerns over an economic slowdown in the US and debt problems in the eurozone.
Council for Economic Planning and Development Minister Christina Liu (劉憶如) said yesterday that the US Federal Reserve’s announcement that it would maintain low interest rates until 2013 indicates that market liquidity would remain ample during this period.
“However, there is still the chance that the Fed will launch another wave of quantitative easing measures, or QE3, to boost the US economy if the low interest rate policy proves less effective than expected,” Liu said, adding that QE3 would bring uncertainty to Wall Street as well as global markets.
Daniel Chang (張博淇), an analyst at Macquarie Capital Securities Ltd in Taiwan, expects a volatile market and predicts shares would fall in the next one to two months amid the continuing fears of a double-dip recession in the US and its impact on other Western countries.
Macquarie’s research team has lowered its year-end forecast for the TAIEX to 8,500 points, from the 9,000 points it previously estimated, after factoring in recent earnings adjustments by Taiwanese technology firms.
“We think a short-term bounce is likely, but don’t expect a full recovery any time soon,” Chang said in the report on Tuesday.
Earlier this week, Citigroup Global Markets Inc lowered its year-end forecast for the TAIEX to 8,770 points from the 10,000 points it had previously set, believing there may only be a muted pre-election rally given the close race between the candidates.
Deutsche Bank AG maintained its year-end forecast for the TAIEX at 9,300 points, with its Taiwan market strategist Joelian Tseng (曾慧瓊) suggesting investors consider bargain-hunting if the index approached 7,000 points.
Credit Suisse also kept its year-end forecast unchanged at 9,500 points, while Goldman Sachs maintained that the TAIEX could reach 10,700 points in 12 months.