Taiwanese stocks surged sharply yesterday after the US and Iran agreed to a two-week ceasefire that injected a burst of optimism into markets.
The benchmark TAIEX climbed 1,531.56 points, or 4.61 percent, to close at 34,761.38, marking the second-largest single-day point gain on record, while the New Taiwan dollar rose NT$0.182 to end at NT$31.785 against the US dollar.
The turnover on the local main board increased to NT$856.26 billion (US$26.94 billion) from NT$584.69 billion on Tuesday, reflecting broad participation from investors.
Photo: CNA
The rally was fueled by easing geopolitical tensions after US President Donald Trump announced a two-week suspension of planned attacks on Iran under a conditional ceasefire.
The ceasefire hinges on Tehran reopening the Strait of Hormuz, a strategic chokepoint for global oil shipments. Iran agreed to temporarily reopen the strait, sending Brent crude futures tumbling as much as 15 percent to below US$100 per barrel and easing some inflationary pressures in global markets.
“Markets generally treat the two-week window as positive,” Taishin Securities Investment Advisory Co (台新投顧) vice president Tony Huang (黃文清) said.
Even if tensions persist beyond the two weeks, the situation is unlikely to escalate into a prolonged conflict, giving investors a chance to return to risk assets, he said.
Institutional investors led the buying frenzy, signaling a reversal in market sentiment after a period of pessimism.
Foreign institutional investors, who had been rapidly exiting the local market last month, increased their holdings in Taiwanese shares by a net NT$117.77 billion yesterday, Taiwan Stock Exchange data showed.
Investment trusts added a net of NT$4.28 billion, while proprietary traders overbought by NT$35.87 billion, the exchange’s data showed.
Technology and electronics sectors were at the forefront of the rally. Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, gained nearly 5 percent to close at NT$1,950.
MediaTek Inc (聯發科), a leading smartphone chip designer, jumped 7 percent to NT$1,580, while Hon Hai Precision Industry Co (鴻海), a major electronics assembler, rose by about 5 percent to NT$201.50. Delta Electronics Inc (台達電), a power supply and electronic components manufacturer, hit the 10 percent daily trading limit at NT$1,665, marking a new all-time high.
Analysts said the surge reflects a combination of geopolitical relief and renewed investor confidence in Taiwan’s technology-heavy market.
“The easing of geopolitical risks prompted investors to rejoin equities after a period of volatility, with technology stocks benefiting from a revived global risk appetite,” Huang said.
Market participants are expected to refocus on fundamentals, as TSMC and other tech firms are scheduled to report earnings from next week.
TSMC and other major technology companies in January issued optimistic revenue forecasts, citing strong demand from artificial intelligence applications, while the Directorate-General of Budget, Accounting and Statistics in February projected GDP growth of 7.71 percent for this year, supported by robust export performance.
The combination of easing external risks and strong domestic economic indicators has helped restore investor confidence, suggesting that Taiwan’s equity market could maintain its upward momentum in the near term, particularly in technology and electronics sectors, analysts said.
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