Backed by foreign investors' heavy buying, shares soared 2.13 percent to a fresh seven-year high yesterday, with the TAIEX rising 182.24 points to 8,755.88.
The benchmark index has risen 11.9 percent this year, compared with a 9.8 gain of the Morgan Stanley Capital International Asia-Pacific Index.
"The jump yesterday was driven by soaring financial stocks, robust international markets during the past two days and stunning foreign net purchasing," Clive Hsueh (
PHOTO: CHANG CHIA-MING, TAIPEI TIMES
The financial sub-index gained by 4.38 percent yesterday, with stocks such as Shin Kong Financial Holding Co (
Foreign institutional investors bought a record net of NT$42.93 billion (US$1.3 billion) yesterday, mainly of financial stocks including Fuhwa Financial Holding Co (
The Taipei market resumed trading yesterday following a two-day holiday, as the nation celebrated the Dragon Boat Festival, during which markets elsewhere in the region surged.
Yesterday's net purchases by foreign investors were the highest ever, if a stock transfer between Royal Philips Electronics NV and its local unit on Dec. 28, 2005 is excluded, according to tallies provided by the Taiwan Stock Exchange.
The exchange's turnover yesterday reached NT$199.51 billion, with 671 shares gainers, 537 decliners and 155 unchanged.
Hsueh, however, said he was conservative about the market outlook for the rest of the month following the recent surges.
"Big foreign net buying is not necessarily good news, as it means people are offloading shares to them," Hsueh said. "Investors should start to take profits amid this bullish market."
Holding a similar view, Mega International Investment Services (
The index may pull back to consolidate for the next three to five weeks after breaking 8,700 points, Mega International said in a report released yesterday. But TAIEX should be around 8,400 this week and is expected to fluctuate between 8,250 and 8,700 by the end of next month, it said.
Strong foreign buying momentum should subside next month, when summer vacation starts, the research note said, adding that rising impetus of high-tech and financial stocks could soften after the recent surges.
Short-term investment picks include Coretronic Corp (
Shin Kong Financial and Fuhwa Financial closed up nearly 7 percent at NT$37.90 and NT$19.05, respectively, while Coretronic lost 0.87 percent to NT$57.
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