Net fund inflows last month hit a nine-month high to reach US$3.02 billion (NT$89.1 billion) as foreign institutional investors resumed buying on the local bourse, according to the Financial Supervisory Commission (FSC).
According to the statistics released by the commission on Friday, foreign institutional investors were net buyers of NT$51.32 billion (US$1.74 billion) worth of shares on the Taiwan Stock Exchange in the past month.
During the same period, foreign institutional investors bought a net of NT$3.93 billion on the over-the-counter (OTC) market, the statistics showed.
The TAIEX closed up 6.29 percent at the end of last month from a month earlier at 7,517.08 points, with the OTC index gaining 10.37 percent to end on 103.63 points at the end of last month. The commission said the increase in fund inflows showed foreign investors remained upbeat about the prospects of the local stock market, and high liquidity as a result of foreign fund injections was expected to benefit the local bourse.
On the back of further foreign fund inflows, the main board and the OTC market will continue to extend their rally this month, market analysts said.
In the first three trading sessions of the month, the TAIEX rose 2.1 percent, while the OTC index added 6.16 percent.
Analysts said the large net buying posted by foreign institutional investors last month appeared significant, although the month had just 15 trading sessions due to the extended Lunar New Year holiday.
They said strong foreign institutional buying interest largely reflected the removal of uncertainty over the local political climate following the Jan. 14 presidential and legislative elections, while the recent improving economic outlook in the US and Europe also prompted foreign investors to enlarge portfolios.
Compared with net fund inflows of about US$6 billion in South Korea so far this year, it was possible that foreign investors could yet move more funds into Taiwan, they added.