The TAIEX rallied 1.08 percent to close at 9,470.94 and the local currency gained 0.2 percent to NT$31.432 against the US dollar yesterday on the back of hot money inflows after the European Central Bank (ECB) on Thursday announced quantitative-easing (QE) measures to prop up the eurozone economy, analysts said.
In its most aggressive move to revive the eurozone’s listless economy, the ECB agreed to buy 60 billion euros (US$68.4 billion) of bonds a month to hold down interest rates and pump cash into the banking system.
The purchases of public and private bonds are due to begin in March and continue through at least September next year, totaling about 1.1 trillion euros.
The local index climbed 101.43 points yesterday, led by market heavyweights such as contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and smartphone camera lens supplier Largan Precision Co (大立光), Marbo Securities Consultant Co (萬寶證券投顧) analyst Winson Wang (王榮旭) said.
TSMC closed up 3.57 percent at NT$145 and Largan rose 5.52 percent to NT$2,770, Taiwan Stock Exchange data showed.
“The movement of shares suggested inflows of hot money as they are the favorites of foreign institutional investors,” Wang said by telephone.
Foreign players increased their holdings in local shares by a net NT$21.17 billion (US$677 million) yesterday, while mutual funds purchased a net NT$437.29 million and proprietary traders a net NT$382.57 million, stock exchange data showed.
Semiconductor shares advanced 2.27 percent, while electronics components gained 2.22 percent, both outperforming the main index.
Turnover totaled NT$118.76 billion, widening from NT$98 billion a day earlier.
Overall, the TAIEX climbed 3.6 percent in a week that saw foreign investors increase their shareholdings for four straight sessions.
The local index might continue to benefit from global fund reallocations, but the pace of the rally might slow as the local bourse has partially priced in the QE policy, Hua Nan Securities Co (華南永昌證券) chairman David Chu (儲祥生) said.
“It remains to be seen if global bourses will rally as Greece is to hold legislative elections on Sunday and the results may affect its eurozone membership,” Chu said by telephone.
Elsewhere in Asia, equity markets also moved higher yesterday, energized for a second day by the ECB’s bolder-than-expected stimulus plan.
Japan’s Nikkei 225 rose 1.1 percent to close at 17,511.75 and Hong Kong’s Hang Seng added 1.3 percent to 24,850.45. South Korea’s KOSPI gained 0.8 percent to 1,936.09, while Australia’s S&P/ASX 200 jumped 1.5 percent to 5,501.80. Markets in India and Southeast Asia also rose, The Associated Press reported.
Meanwhile, hot money inflows also boosted the New Taiwan dollar for the third consecutive session yesterday, with trading volume standing at US$1.53 billion, compared with US$1.57 billion a day earlier, according to central bank statistics.
“Trading volume tends to strengthen ahead of the Lunar New Year holidays as exporters sell greenback positions to distribute year-end bonuses,” a currency trader at a local bank said.
Europe’s QE moves also helped drive global funds to equities, including local shares, the trader said.
The New Taiwan dollar is expected to trade between NT$31.3 and NT$31.6 ahead of the holidays in the middle of next month, the trader said.
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