Local shares on Friday moved higher to overcome stiff technical resistance ahead of 10,400 points as the bellwether electronics sector continued to steam ahead, led by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), dealers said.
The old economy sector also attracted buying as bargain hunters rushed to pick up stocks in the sector, which has lagged behind the high-tech sector, as well as the broader market, for some time, dealers added.
The TAIEX on Friday closed up 90.59 points, or 0.88 percent, at the day’s high of 10,439.24, after rebounding from a low of 10,370, on turnover of NT$152.996 billion (US$4.95 billion).
That was a 1.9 percent gain from a close of 10,241.75 on March 8.
The market opened up 0.25 percent as investors shrugged off a sluggish Wall Street, where the Dow Jones Industrial Average closed up 0.03 percent and the tech heavy NASDAQ ended down 0.16 percent overnight, dealers said.
Buying accelerated on the local main board as TSMC, the most heavily weighted local stock, moved higher to lead the semiconductor sector and the entire electronics sector to post gains, while old economy stocks in the petrochemical and textile sectors were favored by bargain hunters, pushing the TAIEX up to the day’s high at the end of the session, they said.
“TSMC’s gains show that foreign institutional investors tend to push up the index on the spot market in a bid to profit in the futures market, as they still own a large chunk of long position futures contracts,” Mega International Investment Services Corp (兆豐國際投信) analyst Alex Huang (黃國偉) said.
Foreign institutional investors own a net total of about 60,000 long position futures contracts, a high level indicating that they are upbeat about the spot market, Huang said.
TSMC rose 1.92 percent to close at NT$239, with 33.62 million shares changing hands. The upturn enjoyed by TSMC boosted the TAIEX by about 45 points and lifted the electronics sector by 0.82 percent.
Among other electronics stocks, United Microelectronics Corp (聯電), a smaller rival of TSMC, added 1.75 percent to end at NT$11.65, while IC designer MediaTek Inc (聯發科) gained 1.28 percent to close at NT$276.
“Turnover expanded to more than NT$150 billion, so I suspect foreign institutional investors stood on the buy side,” Huang said.
Foreign institutional investors on Friday bought a net NT$5.58 billion of shares on the main board, Taiwan Stock Exchange data showed.
The non-tech sector also rode the wave of strong buying, as “many old economy stocks appeared relatively cheap, attracting bargain hunters,” Huang said.
In the textile sector, Eclat Textile Co (儒鴻) rose 5.13 percent to close at NT$420.50 and Makalot Industrial Co (聚陽) gained 4.3 percent to end at NT$206.
On the back of the rebound staged by international crude oil prices, Formosa Plastics Corp (台灣塑膠) rose 1.44 percent to close at NT$105.50 and Formosa Petrochemical Corp (台塑石化) added 3.57 percent to end at NT$116.
“Despite today’s [Friday’s] gains, the main board is expected to face high technical hurdles ahead of the 240-day moving average of about 10,450 points, so the room for a further upturn will be limited in the short term,” Huang said.
Investors need to pay close attention to a policymaking meeting scheduled by the US Federal Reserve for next week, while ongoing trade talks between the US and China are expected to continue to move global financial markets, Huang added.
Elsewhere in Asia on Friday, markets rose as US President Donald Trump struck an upbeat note on trade talks with China.
While there remain some concerns about the global outlook, investor confidence has been supported by ongoing optimism that the world’s two biggest economies will eventually hammer out a deal to end their long-running trade row.
The US president provided fresh cheer on Thursday by telling reporters that “we are doing very well with China talks,” adding that “we are getting what we have to get.”
“One way or the other, we’re going to know over the next three to four weeks,” Trump said.
His comments came as Chinese state media said that telephone talks had been held by Beijing’s top negotiator, Chinese Vice Premier Liu He (劉鶴), with US Trade Representative Robert Lighthizer and US Secretary of the Treasury Steven Mnuchin.
Mnuchin earlier on Thursday said that he expects the deal to be finalized soon, but cautioned that the process is complex.
Trump had said that he expected to hold a meeting in Florida with Chinese President Xi Jinping (習近平) later this month, but Bloomberg said that the “signing summit” had been pushed back a month as negotiators struggled to resolve their differences.
On Friday, China approved a foreign investment law that would abolish the forced transfer of technology from foreign firms to local joint venture partners, addressing a key point of anger in the White House.
At the end of the annual session of the rubber-stamp Chinese National People’s Congress, Chinese Premier Li Keqiang (李克強) promised not to let the world’s second-largest economy “slip out of a reasonable range” and pledged support, such as interest rate cuts.
The developments helped boost equities in the region.
Tokyo’s Nikkei 225 on Friday ended up 163.83 points, or 0.8 percent, at 21,450.85, jumping 2 percent from 21,025.56 on March 8.
Hong Kong’s Hang Seng on Friday rose 160.87 points, or 0.6 percent, to 29,012.26, a 2.8 percent surge from 28,228.42 a week earlier.
The Shanghai Composite on Friday closed up 31.07 points, or 1 percent, at 3,021.75, an increase of 1.7 percent from 2,969.86 on March 8.
Seoul’s KOSPI on Friday gained 20.43 points, or 1 percent, to 2,176.11, rising 1.8 percent from a close of 2,137.44 a week earlier.
Singapore, Wellington, Mumbai and Jakarta also closed up, but Sydney ended marginally lower.
While traders remain uneasy about the global economy, there is some optimism.
“There is a pretty good backdrop going forward,” Wells Fargo Asset Management portfolio manager Margaret Patel said.
“We’re in a low-inflation environment for the foreseeable future and that really changes the equation about equity values — they can go higher. The Fed isn’t going to do much and inflation remains stubbornly low,” she told Bloomberg TV.
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