Shares rose yesterday, with the TAIEX completing its biggest gain in two months amid optimism the government will widen access to the country’s stock market for Chinese investors.
The benchmark gauge advanced 1.74 percent to close at 9,238.03 points on the Taiwan Stock Exchange (TWSE), led by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Formosa Plastics Corp (台塑).
TSMC, the most heavily weighted stock in the local market, gained 2.99 percent to close at NT$138, while Formosa Plastics rose 5.11 percent — its biggest advance since June 2012 — to close at NT$72 and AU Optronics Corp (AUO, 友達光電) surged by the maximum daily 7 percent to close at NT$18.9.
Foreign institutional investors bought a net NT$8.84 billion (US$276.3 million) worth of local shares on the main board yesterday after a net sell of NT$3.81 billion in the previous session, according to the TWSE.
Local stocks might be offered to individual Chinese investors for the first time later this year in a bid to attract more investment, Financial Supervisory Commission Chairman William Tseng (曾銘宗) said on Wednesday.
The commission hopes to make a decision in June whether to go ahead with the plan.
Chinese institutions are allowed to invest in Taiwan’s stock market, but individuals are not.
The new link-up would allow individuals to buy or sell stocks listed on the Taiwan bourse through the offshore securities units of local brokers.
The move might provide a boost to the nation’s US$935 billion stock market, which has trailed the performance of Chinese equities in the past year.
“The news is positive because it’s expected to bring fresh capital to the market,” Agriculture Bank of Taiwan (全國農業金庫) fund manager Parker Wu (吳年恭) said by telephone yesterday. “If things go smoothly, the program will be started in the second half [of the year] at the earliest.”
Daily trading volume has shrunk to about NT$90 billion, down from NT$130 billion at its height in the 1990s, as Taiwanese investors sought to diversify their investment portfolios.
Local stocks have risen 8 percent in the past year and trade at 15.3 times reported earnings. That is cheaper than the Shanghai Composite Index for the first time since 2011. The Chinese gauge is valued at 15.9 times after rallying 62 percent.
Analysts were cautious over whether the new move would appeal to Chinese buyers.
“It is not clear if opening up the market will lure investors — the Chinese market seems more attractive since it’s much bigger and it’s on the rebound,” Capital Management Corp (統一投顧) president Vickie Hsieh (謝雯霞) said. “However, Taiwan has its own niche, as it is strong in the semiconductor industry.”
Additional reporting by CNA and AFP
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