Taiwan’s success in retaking a slice of the global technology supply chain amid a US-China trade dispute is paying off for investors, with the TAIEX yesterday closing above 12,000 points for the first time since 1990.
Like Japan, Taiwan saw a bubble in its equities burst three decades ago and it has been a long walk back.
However, unlike Japan, Taiwan has in the past several years gone from strength to strength with its manufacturing — which now accounts for about one-third of its economy, up from one-fourth at about the turn of the millennium, Gavekal Research said.
Photo: CNA
The TAIEX yesterday rose 1.32 percent to close at 12,097.01, taking its gain for the year to 24 percent. It is on pace for its biggest annual gain since a rebound from the global financial crisis a decade ago.
The New Taiwan dollar is also climbing, near its highest level against the greenback since June last year. Yet, further gains could be in store, with a bout of potential political risks related to the presidential and legislative elections on Jan. 11 creating an opening to buy Taiwanese equities, Gavekal analyst Vincent Tsui (徐天佑) wrote in a note last month.
Gavekal cited an uptick in export orders for electronic products and rising sales by semiconductor firms as reasons for optimism.
The nation’s three biggest semiconductor firms saw combined revenue jump 19 percent quarter-on-quarter in the third quarter to a record US$10.8 billion, the research firm said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest supplier of made-to-order chips and accounting for nearly one-fourth of the TAIEX’s weighting, yesterday added 2.58 percent to close at NT$345, extending its record high.
Led by TSMC and its sound fundamentals, the bellwether electronics sector anchored the broader market, while non-technology stocks were mixed.
Formosa Plastics Corp (台塑) gained 2.38 percent to NT$99.1 and food brand Uni-President Enterprises Corp (統一企業) added 0.41 percent to NT$72.56, while Fubon Financial Holding Co (富邦金控) lost 0.21 percent to NT$46.5.
The TAIEX was spurred by the record highs set by the Dow Jones Industrial Average and the NASDAQ index overnight after Washington and Beijing agreed to a “phase one” deal to resolve their trade dispute.
Turnover yesterday totaled NT$154.775 billion (US$5.12 billion), compared with NT$144.85 billion on Monday, indicating a greater willingness to trade, dealers said.
The positive leads in global trade have seen foreign institutional investors move funds into the region, boosting regional currencies including the New Taiwan dollar, which yesterday rose NT$0.053, or 0.18 percent, to close at NT$30.210 against the US dollar.
Additional reporting by CNA
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