The stock market surged 1.92 percent to close at 7,603.23 yesterday, as investors’ confidence was boosted by news that Greece would scrap a proposed referendum, which has since been confirmed, over an EU bailout fund, raising fresh hopes that the European debt crisis could ease.
The European Central Bank’s (ECB) unexpected move to cut key interest rates by 25 basis points to shore up the eurozone’s economy also helped lift share prices.
Turnover rose to NT$110.49 billion (US$3.68 billion) from NT$106.03 billion on Thursday, Taiwan Stock Exchange data showed.
“The TAIEX followed yesterday’s [Thursday] global stock markets’ rebound, mainly due to relief over Greece’s decision to call off a referendum, as well as the ECB’s move to cut its key interest rates,” said Chang Shu-hui (張淑蕙), a fund manager at Prudential Financial Securities Investment Trust Enterprise Co (保德信投信), in an investment note.
Foreign investors bought a net total of NT$4.9 billion in shares, giving the New Taiwan dollar a boost. The local currency rose NT$0.195 to close at NT$30.025 against the US dollar yesterday, central bank data showed.
The electronics sub-index rose 1.71 percent, led by LED and LCD panel makers on news that the Chinese government might forbid the use of incandescent light bulbs.
Shares of Epistar Corp (晶電), the nation’s largest LED chipmaker, rallied 6.93 percent to NT$64.80.
Meanwhile, shares of the nation’s two biggest LCD panel manufacturers, Chimei Innolux Corp (奇美電子) and AU Optronics Corp (友達光電), soared 6.64 percent and 6.79 percent to NT$13.65 and NT$14.95 respectively, with both hitting their highest levels in about three months.
The auto sub-index surged 3.47 percent, while the financial sub-index increased 2.61 percent, according to stock exchange data.
Chang expected the local stock market to regain momentum in the near future, as the TAIEX has lagged behind most Asian stock markets’ recent rebound.
However, lingering concern over the eurozone debt crisis remains a major risk for the stock market, Chang said, adding that these uncertainties could lead to volatile trading in the short term.
Eric Li (李俊毅), a fund manager at Allianz Global Investors Taiwan Ltd (德盛安聯投信), shared Chang’s view.
“There are still a lot of details to be clarified and confirmed about the eurozone’s debt problem and Greece’s referendum issue,” Li said in an investment note.
Li expected makers of lower-priced electronics products — such as middle to low-end smartphones and LED TVs — to lead the index’s rise in the near term, saying these products usually have stronger growth momentum than higher-priced products in a slowing economy.
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