Taipei, Aug. 15 (CNA) Shares in Taiwan gained more than 120 points Monday, as buying was sparked by a rally on the United States markets amid reduced worry over inflation, dealers said.
The bellwether electronics sector led the upturn, with large-cap semiconductor stocks in focus, while buying also rotated to raw material stocks, lending further support to the broader market, dealers said.
The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 128.38 points, or 0.84 percent, at 15,417.35, after moving between 15,315.12 and 15,437.23. Turnover totaled NT$234.3 billion (US$7.8 billion).
The market opened up 0.29 percent, and buying increased as investors rushed to snap up semiconductor heavyweights, following a 2.99 percent surge on the Philadelphia Semiconductor Index and a 2.09 percent hike on the tech-heavy Nasdaq index in the U.S. on Friday, dealers said.
The electronics sector led the Taiex's upturn, along with some rotational buying in the steel and petrochemical sector, helping to push the Taiex past the 60-day moving average of 15,310 points and over the 15,400-point mark by the end of the session, dealers said.
"The strong showing on the U.S. markets reflected easing concerns over inflation there, based on the country's July consumer price index (CPI) and producer price index (PPI) data," Mega International Investment Services Corp. analyst Alex Huang said. In July, the U.S. CPI growth moderated to 8.5 percent from 9.1 percent in June, while its PPI dropped 0.5 percent from a month earlier.
"Moreover, consumer confidence in the U.S. improved in July, indicating that inflation did not hurt the economy too much, which gave investors on the U.S. markets incentive to buy, and those here followed suit," Huang said, referring to the University of Michigan's preliminary August reading, which showed the U.S. consumer confidence index at 55.1, up from 51.5 from July.
On Monday, investors in Taiwan scrambled to buy into big semiconductor stocks, which had been hard hit in recent sessions by fears over a rate hike cycle by the U.S. Federal Reserve.
"Today, those tech heavyweights, led by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), were following their counterparts on the U.S. markets," Huang said.
After a 1.50 percent increase in TMSC's American depositary receipts (ADRs) on Friday, the stock rose 1.16 percent to close at NT$523.00. The gains by TSMC, the most heavily weighted on the local market, contributed about 50 points to the Taiex's rise and 1.17 percent to the electronic sector's.
Huang said that with TSMC shares becoming technically healthier, the stock is expected to soon challenge its 120-day moving average of NT$533.00.
Among other semiconductor stocks, United Microelectronics Corp. (UMC) gained 2.72 percent to end at NT$43.50, after its ADRs rose 2.69 percent on Friday. In addition, smartphone IC designer MediaTek Inc. gained 3.22 percent to close at NT$706.00, and application-specific IC (ASIC) designer Alchip Technologies Ltd. soared 6.80 percent to end at NT$770.00.
Also in the tech sector, flat panel maker AU Optronics Corp. staged a technical rebound, rising 0.99 percent to close at NT$15.25, and rival Innolux Corp. finished 0.44 percent higher at NT$11.40.
However, dynamic random access memory chip supplier Nanya Technology Corp. fell 0.55 percent to close at NT$53.80, and iPhone assembler Hon Hai Precision Industry Co. ended down 0.44 percent at NT$112.00.
"Overall, market sentiment on the local main board has improved, so the buying spread to old economy stocks," Huang said. "Today, steel stocks were spotlighted because of their higher product prices."
The steel sector rose 1.76 percent, with China Steel Corp., the largest steel maker in Taiwan, rising 1.39 percent to close at NT$29.1, and Chung Hung Steel Corp. gaining 6.15 percent to end at NT$27.60. In addition, Yieh Phui Enterprise Co. rose 2.53 percent to close at NT$16.20, and Ta Chen Stainless Pipe Co. climbed 1.92 percent to finish at NT$39.90.
In the petrochemical sector, which rose 0.86 percent, Formosa Petrochemical Corp. gained 1.20 percent to close at NT$84.60, and Nan Ya Plastics Corp. added 1.44 percent to end at NT$70.60.
The financial sector, meanwhile, slowed down after the previous few sessions, closing up only 0.04 percent. Cathay Financial Holding Co. rose 0.11 percent to end at NT$47.30, and Fubon Financial Holding Co. added 0.17 percent to close at NT$60.10, while E. Sun Financial Holding Co. lost 0.35 percent to finish at NT$28.35.
"As fears over an aggressive Fed ease, the U.S. markets may continue to trend higher, prompting the Taiex to follow," Huang said, "Unless turnover expands to NT$280 billion-NT$300 billion, however, it will not be easy for the Taiex close much higher than 15,650 points."
Foreign institutional investors stood on the sell side Monday, registering a net sell of NT$5.05 billion worth of shares on the main board, according to the TWSE.