Shares in Taiwan yesterday rose sharply as fears over near-term interest rate hikes in the US subsided following testimony by US Federal Reserve Chair Jerome Powell at a congressional hearing.
Powell said that while there is inflation in the US, most of the increase in prices was temporary, a view that helped push the tech-heavy NASDAQ to an all-time high and enabled the bellwether electronics sector to lead the upturn in Taipei trading, an analyst said.
“Powell’s comments did ease concerns over a possible rate hike cycle, so investors at home and abroad became more willing to pick up bargains after recent heavy losses,” Cathay Futures Consultant Co (國泰證期顧問) analyst Tsai Ming-han (蔡明翰) said.
Before yesterday’s surge, the TAIEX fell 1.48 percent on Monday on rate hike fears and rose only 0.07 percent on Tuesday.
“The electronics sector made a comeback and drove the gains on the broader market as investors reacted to the NASDAQ rally,” Tsai said. “In addition to the semiconductor industry, many other electronics component stocks also steamed ahead, benefiting the broader market.”
The TAIEX yesterday closed up 261.16 points, or 1.53 percent, at 17,336.71, on turnover of NT$524.793 billion (US$18.74 billion), Taiwan Stock Exchange data showed.
Foreign institutional investors bought a net NT$10.96 billion in shares.
Contract chipmakers Taiwan Semiconductor Manufacturing Co (台積電) and United Microelectronics Corp (聯電) rose 2.95 percent and 3.92 percent respectively, while smartphone IC designer MediaTek Inc (聯發科) increased 4.21 percent and IC packaging and testing services provider ASE Technology Holding Co (日月光投控) gained 2.65 percent.
“Despite a high-flying TAIEX, old-economy stocks appeared mixed, as shipping and select raw material stocks faced profit-taking as buying concentrated on the electronics sector,” Tsai said.
The transportation sector plunged 8.49 percent, with shipping firms Evergreen Marine Corp (長榮海運), Yang Ming Marine Transport Corp (陽明海運) and Wan Hai Lines Ltd (萬海航運) all losing 10 percent, the maximum daily decline.
Taiwan High Speed Rail Corp (台灣高鐵) bucked the downturn, rising 1.01 percent.
In the steel sector, which lost 2.61 percent, China Steel Corp (中鋼) fell 2.07 percent, Tung Ho Steel Enterprise Corp (東和鋼鐵) dropped 3.37 percent and Chung Hung Steel Corp (中鴻鋼鐵) declined 6.67 percent.
“Investors should keep a close eye on whether the electronics sector’s momentum will continue. If it does not, the TAIEX would probably not challenge 17,709 points — an intraday high on April 29 — or end above that level,” Tsai said.
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