Share prices closed up 0.58 percent yesterday to stand above the key 9,000-point mark as the financial sector extended momentum on hopes that rising interest rates will boost banks’ interest income, dealers said.
The old-economy sector was boosted by ample liquidity amid optimism toward an earnings outlook on increasing business exchanges across the Taiwan Strait, they said.
The weighted index rose 52.80 points to 9,025.30, after moving between 8,994.50 and 9,041.32, on turnover of NT$148.67 billion (US$4.95 billion).
The market opened up 0.75 percent to breach 9,000 points and moved to the day’s high in line with other regional markets, in particular Shanghai and Hong Kong, before mild profit-taking set in to compromise the early gains, the dealers said.
A total of 2,263 stocks closed up, 2,116 were down and 311 remained unchanged.
The paper and pulp sector scored the highest gain, ending up 3.71 percent. Textile stocks rose 2.66 percent, financial shares added 2.58 percent, cement gained 1.87 percent and the construction sector closed up 1.81 percent.
Plastics and chemicals stocks rose 0.63 percent and foodstuffs gained 0.37 percent, while the machinery and electronics sector closed down 0.25 percent.
The central bank raised its key interest rates by 0.125 percentage points on Thursday, the third interest rate hike since June, after the economy staged a strong rebound.
Mega Securities (兆豐證券) analyst Alex Huang (黃國偉) said the latest interest rate hikes remained in an early stage of an interest rate increase cycle.
“The market is expecting the central bank to announce additional rate hikes in each of the four quarterly policy making meetings this year,” Huang said.
“Investors have become upbeat that a wider interest spread due to the central bank’s moves will boost the financial sector’s bottom line,” he said.
Huang said the gains posted by the broader market were basically liquidity driven, adding that investors with large funds on hand were eager to park their money in safe havens like the financial sector and non-high-tech stocks.
Many investors, however, kept their hands off the bellwether electronics sector amid fears that a rising NT dollar would hurt Taiwan’s global competitiveness, Huang said.
“As the index has moved to the strong resistance level of about 9,000 points, it is possible that the market will encounter volatility in the short term,” he said.
In the financial sector, Shin Kong Financial (新光金控) gained 6.79 percent to close at NT$14.95 and China Development Financial (中華開發金控) rose 6.61 percent to end at NT$13.70.
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