The TAIEX yesterday spiked 2.1 percent, or 159.25 points, to 7,738.05, as the US Federal Reserve’s latest bond-buying program fueled expectations of a liquidity-backed rally, pushing the benchmark index to a five-month high.
Turnover surged to NT$133.5 billion (US$4.53 billion), from NT$82.2 billion on Thursday, with across-the-board gains on inflows of hot money, which sent the local currency rising to NT$29.469 against the greenback, its strongest close since May 11, Taiwan Stock Exchange (TWSE) and central bank data showed.
“The Federal Reserve’s announcement of a third round of quantitative easing [QE3] will benefit Asian bourses as global funds seek to take advantage of the region’s relatively strong economy,” JPMorgan Asset Management (摩根富林明投信) fund manager James Yeh (葉鴻儒) said.
Yeh expects a sustained, six-month rebound, with the market rising an average of 17.34 percent in the previous two quantitative easing cycles.
The Fed also announced on Thursday that it would keep the federal funds rate at zero to 0.25 percent at least through the middle of 2015 and purchase an additional US$40 billion a month in mortgage-backed securities.
The Fed’s move, aimed at invigorating the US housing market, will inevitably drive up raw material, commodity and other asset prices with the printing of more US dollars, Yeh said.
Institutional investors have been building up their position since last week in anticipation of QE3, he said.
Foreign funds bought a net NT$15.77 billion in local shares yesterday, while net purchases by proprietary traders and mutual funds were NT$2.56 billion and NT$676.17 million respectively, TWSE figures showed.
Altogether, the benchmark index picked up 4.22 percent this week, led by gas and fuel stocks at 8.13 percent, market data showed.
The advent of the high season for consumer electronics will also help the local bourse, especially for technology firms that will be launching new-generation products and suppliers of critical components, said Sunny Chung (鍾兆陽), a fund manager at Allianz Global Investors Taiwan Ltd (德盛安聯證券投信).
Shares in smartphone maker HTC Corp (宏達電), which plans to unveil a new premier product next week, closed up at the daily 7 percent limit at NT$296.50, while Hon Hai Precision Industry Co (鴻海精密), which assembles iPads and iPhones for Apple Inc, soared 4.95 percent to NT$97.60.
“While the iPhone 5 failed to surprise the market, it may still sell well given the new features,” Chung said. “Companies in Apple’s supply chain may receive a boost in shipments and revenue.”
Fidelity Investments and Schroder Investment Management Taiwan Ltd agreed that the Fed’s quantitative-easing measures would be favorable to Asian bourses and that investors may raise their holdings.
Jenny Lai (賴惠娟), head of research at HSBC Securities Taiwan, said that QE3 was expected to prompt more foreign funds to enter the local bourse and further lift share prices.
Anticipating that buying would spread to small and medium-cap electronics stocks, such as companies in the Apple supply chain, after the launch of the iPhone 5, the TAIEX is likely to move higher to 8,000 in the near term, Lai said.
In addition to the Fed’s stimulus measures, China’s announcement last week that it would pour more than 800 billion yuan (US$127 billion) into transportation infrastructure will further boost liquidity in the region, said Jim Hung (洪進揚), head of research at PNB Paribas Securities Taiwan.
Taiwan, South Korea and China are expected to benefit from ample liquidity, giving the TAIEX a good chance to challenge the 8,000-point mark, he said.
Additional reporting by CNA
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
RSS