The nation’s benchmark index has entered a bull market as global investors poured cash into local equities, drawn by upbeat earnings and high company dividends.
The TAIEX yesterday climbed 0.94 percent to 8,949.85 points, closing more than 20 percent above a three-year low set on Aug. 24 last year.
Taiwan Stock Exchange tallies showed that foreign institutional investors bought a net NT$14.97 billion (US$467.96 million) worth of shares on the local main board yesterday.
The equity gains came amid bets the US Federal Reserve would not raise borrowing costs this year after Britain’s vote to leave the EU.
The TAIEX’s dividend yield of 4.1 percent is nearly 51 percent higher than that for the MSCI Emerging Markets Index, while some of the nation’s largest listed firms, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), reported second-quarter earnings that beat estimates.
“This wave of gains has been due to loose liquidity and higher dividend yields on Taiwan’s stocks,” said Peter Tzeng (曾耀德), senior vice president at IBTS Investment Consulting Co (台灣工銀投顧) in Taipei. “Electronics companies’ earnings in the second quarter have been relatively optimistic.”
TSMC, the nation’s largest company by market value, this week forecast third-quarter sales that are higher than analysts’ average estimates, as Apple Inc prepares to introduce its latest iPhone and Chinese smartphone brands contributed to demand.
Formosa Petrochemical Corp (台塑石化) and Nan Ya Plastics Corp (南亞塑膠), which also rank among the nation’s five largest firms by capitalization, posted second-quarter earnings that exceeded estimates.
The financial sector also attracted bargain hunters, with Cathay Financial Holding Co (國泰金控), Fubon Financial Holding Co (富邦金控) and Mega Financial Holding Co (兆豐金控) posting solid gains.
Foreign funds have injected a net US$1.5 billion in cash into Taiwanese stocks so far this month, taking inflows this year to US$7.8 billion, the most among Asian markets tracked by Bloomberg.
“I think foreign institutional investors will continue to move funds into the region and the equity market here is expected to benefit from ample liquidity to challenge 9,000 points soon,” President Capital Management Corp (統一投顧) equity analyst Vickie Hsieh (謝雯霞) said.
Additional reporting by CNA
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