The TAIEX yesterday rallied 2.81 percent, or 293.35 points, to close at 10,714.44, as investors rebuilt their positions to catch up with gains on Wall Street over the Lunar New Year holiday, traders said.
The Dow Jones industrial average picked up more than 700 points during the Lunar New Year break in Taiwan, despite a 254-point drop on Tuesday after disappointing earnings results from major US corporations, while pressure over interest rate hikes escalated.
“The rebound in the TAIEX might be sustainable as the global economy improves, although uncertainty over capital movements and a potential market correction remains,” Yuanta Securities Investment Consulting Co (元大投顧) senior manager Lee Cheng-yen (李政諺) said.
Photo: Fang Pin-chao, Taipei Times
Yields on US 10-year bonds rose to 2.87 percent last week, driving fund managers to slash investment-grade corporate debts by US$2 billion and emerging market debts by US$2.9 billion, the worst capital flight in 60 and 64 weeks respectively, JPMorgan Asset Management Taiwan said.
Unease is gathering strength amid worries that the US Federal Reserve might raise borrowing costs more quickly this year after US consumer prices climbed more than expected last month, which could be read as signs the US economy is overheating, the US fund house said.
Monetary tightening moves would suggest less funds available for equity markets across the world.
However, foreign institutional players increased holdings in local shares by a net NT$9.21 billion (US$314.9 million) yesterday, while mutual funds and proprietary traders recorded net purchases of NT$473.47 million and NT$82.98 billion, Taiwan Stock Exchange data showed.
Turnover rose to NT$145.13 billion, a 36 percent increase from NT$106.59 billion on Monday last week, the last trading day before the holiday break, according to the Taiwan Stock Exchange (TWSE).
The TAIEX is likely to consolidate between 10,500 and 10,800 points, with a positive bias in the short term, Yuanta Securities said.
Technology shares led yesterday’s rebound, with optical plays seeing the biggest advance of 5.26 percent.
Shares of Largan Precision Co (大立光), which supplies camera lenses for international smartphone brands, ended up 7.34 percent at NT$3,950, while Taiwan Semiconductor Manufacturing Co (台積電), the world’s largest contract chipmaker, gained 2.54 percent to NT$242.50, TWSE data showed.
The food sector picked up 3.89 percent, with shares of food and retail conglomerate Uni-President Enterprises Corp (統一企業) rising 5.65 percent to NT$69.20 and shares of Wei Chuan Foods Corp (味全食品) advancing 3.02 percent to NT$22.20, data showed.
Food makers usually benefit from a surge in business over the holiday.
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