The TAIEX closed above the 8,000-point mark yesterday for the first time in more than six months as foreign institutional investors continued to rebuild their Taiwanese portfolios, dealers said.
Interest focused on large cap stocks, in particular in the high-tech sector, on active bargain hunting, helping the broader market overcome technical resistance ahead of 8,000 points, they said.
The TAIEX closed up 121.16 points, or 1.54 percent, at 8,005.24 after moving between 7,902.08 and 8,011.87 on turnover of NT$157.695 billion (US$5.35 billion).
It was the first time the index had closed above 8,000 since Aug. 4.
Shares of Taiwan Semiconductor Manufacturing Co (台積電), the world’s largest contract chipmaker, rose 1.55 percent to close at NT$78.5 after the company proposed issuing a cash dividend of NT$3 for last year, while those of Hon Hai Precision Industry Co (鴻海精密), which makes iPhones and iPads for Apple Inc, gained 2.48 percent to close at NT$103.5.
“After a consolidation in the past few sessions, large-cap stocks regained their steam today as foreign institutional investors continued to rebuild their portfolios on the local bourse,” Mega Securities (兆豐證券) analyst Alex Huang said.
Huang said the latest gains were driven by futures trading as foreign investors took long positions on improving sentiment on the outlook for the local market.
“Look at the rising Taiwan dollar. Foreign institutional investors continued remitting money to bet on a further upside in share prices,” Huang said.
Since the Lunar New Year holiday ended on Jan. 29, the TAIEX has gained about 10.67 percent, Taiwan Stock Exchange data showed.
In recent sessions, daily trading volume has mostly ranged between NT$130 billion and NT$140 billion, data showed.
As long as daily turnover does not exceed NT$200 billion, the local market will not become overheated, Morgan Stanley strategist Jeremy Chen (陳建名) said in a recent note.
Chen said the liquidity-driven gains are expected to continue into April, when the ongoing reporting season will reach its peak.
However, Chen still maintains a full-year target of 7,900 points for the TAIEX as global financial markets remain haunted by uncertainty over global economic fundamentals.
Huang also cautioned that investors should be ready for a possible pullback after the latest advance.
“The market will likely encounter heavy profit-taking after having breached 8,000 points,” Huang said. “Technical resistance is expected to be very strong. Be careful.”
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