Taiwanese shares yesterday moved sharply higher to close at a historic high as market sentiment improved on the back of progress in the development of a COVID-19 vaccine.
With concern over the virus easing, investors bought old economy and financial stocks, which had lagged behind the broader market, while the bellwether electronics sector stabilized after consolidating recently, dealers said.
The TAIEX closed up 180.47 points, or 1.38 percent, at the day’s high of 13,262.19, topping Monday’s high of 13,127.47.
Photo: CNA
Turnover was NT$239.05 billion (US$8.29 billion).
Foreign institutional investors bought a net NT$15.39 billion of shares on the main board, Taiwan Stock Exchange data showed.
“Judging from the TAIEX’s strong showing, I think investors became more upbeat because of the vaccine development,” Concord Securities Co (康和證券) analyst Kerry Huang (黃志祺) said.
Huang said the optimism carried over to the energy sector, with international crude oil prices rising amid hopes that global demand would rise as economies improve.
“That’s why old economy stocks in the commodity sector became favorites among investors, with petrochemical firms in focus on the back of a spike in crude oil prices,” Huang said. “The broader market benefited from the strong gains posted by large-cap stocks under the Formosa Plastics Group (台塑集團), as many investors looked for bargains.”
Other raw material stocks also moved higher on economic recovery hopes, while buying also rotated to the financial sector in a market awash in liquidity.
“Moreover, the tech sector climbed out of its recent doldrums today, which gave another boost to the broader market throughout the session,” Huang said.
In related news, global index provider MSCI Inc has lowered Taiwan’s weighting in three of its major indices after a semi-annual index review this month.
In a statement released on its Web site overnight, MSCI said it has cut Taiwan’s weighting in the MSCI Emerging Markets Index, which is closely watched by foreign institutional investors, from 12.8 percent to 12.47 percent, the seventh consecutive downgrade.
Taiwan suffered the steepest cut of 0.33 percentage points on the MSCI Emerging Markets Index after the latest review, while India enjoyed the largest upgrade of 0.81 percentage points.
The index provider also downgraded Taiwan’s weighting on the MSCI All-Country Asia ex-Japan Index by 0.27 percentage points to 13.95 percent, and on the MSCI All-Country World Index from 1.62 percent to 1.61 percent.
Earlier in the day, MSCI announced that it has added drug developer Oneness Biotech Co (合一生技) and printed circuit board maker Unimicron Technology Corp (欣興電子) to the MSCI Global Standard Indexes, with analysts saying the inclusion reflects the two stocks’ gains in the past few months.
MSCI has 23 Taiwanese stocks on the MSCI Global Small Cap Indexes, with five from the biotech or healthcare industries amid COVID-19 concerns.
After the latest index review, the number of stocks on the MSCI Taiwan Index remains unchanged at 87.
Despite Taiwan’s reduced weighting in the three MSCI indices, analysts said the impact should be limited, as local economic fundamentals remain sound, given its success in combating the virus.
Moreover, as major central banks around the world pump funds into the market to offset the economic damage caused by the virus, emerging markets such as Taiwan are expected to continue to benefit from high liquidity, they said.
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