The TAIEX staged its third rally in three days yesterday as government funds and professional players capitalized on buying opportunities.
The index ended up 81.21 points, or 1.5 percent, to close at 5,680.95 yesterday, on turnover of NT$87.4 billion.
Analysts said that whether the market has ended the steep decline that started in May remains a question, adding that 5,000 could be the temporary bottom for the near-term.
Major buying yesterday came from foreign investors, who bought a net total of NT$9.34 billion (US$291.1 million) in shares, significantly higher than NT$582 million bought by local funds, according to the Taiwan Stock Exchange.
Most of the buying was concentrated on Taiwan Semiconductor Manufacturing Co (
Most other electronics shares also rose.
The National Stabilization Fund (國安基金) was also said to be a major buyer yesterday, but exact trading figures were not disclosed.
Nevertheless, finance and banking shares lagged behind electronics, with only Cathay Life Insurance (
Ninety-three shares rose, 379 fell and 71 were unchanged. However, as many as 157 shares dropped limit-down and only 14 rose limit-up.
"Whether the TAIEX can continue its rise depends on the performance of the US NASDAQ this week," said Henry Cheng (
"If the US market stops declining, local investors might regain confidence.
"Foreigners have started to buy up bargains in the market, as high-tech shares have begun to attract these shrewd investors.
"Because local investors tend to follow foreign investors' strategy, high-tech shares are most likely near their lower limit.
"If the domestic environment improves, there is a chance for a further rebound by the most promising companies."
"From the technical point of view, the TAIEX is likely to stay above 5,000 points in the near-term," Cheng said.
"However, after the current rebound ends, the TAIEX is likely to test the 5,000-point level once again. If the market remains above 5,000, the market bottom will most likely be confirmed at that level."
In related market news, the Ministry of Economic Affairs is mulling the introduction of a no-par value stock system to help companies in the raising of capital, a ministry official said yesterday.
"We are still looking into the possibility and are also studying the overall system with the Securities and Futures Commission.
"We are in the preliminary stage of study and it will be quite some time before we make a concrete proposal to the Cabinet and other departments," the official said.
Taiwan currently subscribes to a par value stock system, whereby all shares are issued at a face value of NT$10.
The official said that if adopted, the no-par value stock system will co-exist with the current par-value stock system.
However, companies will have the option of using either system.
"The no-par value stock system will allow companies with shares priced lower than NT$10 to issue new shares.
"This would make it easier for certain companies to raise funds," the official said.
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