Taiwan stocks yesterday rebounded, posting their best gains since March last year thanks to a broader rally among chipmakers.
Investors were buoyed by hopes that Taiwan might soon receive more COVID-19 vaccines and also by strong buying among foreign institutional investors on Monday, dealers said.
The TAIEX closed up 792.09 points, or 5.16 percent, at 16,145.98. The nearly 800-point gain was the biggest single-day rise in its history, smashing the previous high of 590.19 points on Nov. 29, 1989.
Photo: Tu Chien-jung, Taipei Times
Turnover totaled NT$410.207 billion (US$14.68 billion), as foreign institutional investors continued to pour money into the market, registering a net buy of NT$22.13 billion, the Taiwan Stock Exchange said.
“The dive in the TAIEX on Monday did not deter foreign institutional investors, which bolstered the confidence of many local investors, who seemed willing to chase prices today,” Concord Securities Co (康和證券) analyst Kerry Huang (黃志祺) said, referring to a net buy of NT$33.42 billion in shares by foreign institutional investors on Monday.
“More importantly, after the announcement of US President Joe Biden’s decision to send more COVID-19 vaccines to other countries, many investors became optimistic that Taiwan would receive some of them,” Huang said.
On Monday, a Reuters report quoted GAVI, the Vaccine Alliance — one of the WHO’s COVAX partners — as saying that it expects Taiwan to get its allocation of AstraZeneca COVID-19 vaccines by the end of next month.
Before yesterday’s rebound, the TAIEX had plunged 11.78 percent since the beginning of last week as Taiwan saw an escalation of locally transmitted COVID-19 cases.
Yesterday, Deputy Minister of Finance Frank Juan (阮清華) said that the state-run National Stabilization Fund was still monitoring the market.
Chipmaker Taiwan Semiconductor Manufacturing Co (台積電) jumped 4.19 percent, while chip designer MediaTek Inc (聯發科) climbed 8.75 percent. The two contributed the most to the benchmark’s gains. Steel, glass and shipping were among the top-performing sectors.
The TAIEX is by far the most volatile among major stock benchmarks tracked by Bloomberg, with a measure of 10-day swings the highest in more than a year.
Stock traders are preparing for more volatility ahead, loading up on options tracking the TAIEX.
The cost of hedging against swings in TAIEX rose to a 12-year high versus the S&P 500 on Monday, prices for one-month options compiled by Bloomberg showed.
“Investors should keep a close eye on the development of the local COVID-19 outbreak, which is likely to move the market,” Huang said, adding that there is strong technical resistance for the TAIEX at about 16,500, near the 60-day moving average.
Separately yesterday, the Financial Supervisory Commission said that financial companies should continue to maintain their operations and services even if the COVID-19 alert is raised to level 4.
The local stock and futures markets would open, while banks should at least maintain their online services and automatic-teller machines, and brokerage firms should operate their online trading platforms, it said.
Insurance companies should still review clients’ compensation claims and provide policies via online services, it said.
Additional reporting by Kao Shih-ching
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