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Local bourse closes above 7,600 points on power hike revision

Local bourse closes above 7,600 points on power hike revision

Taipei, May 2 (CNA) Strong buying in the local bourse emerged Wednesday to push the index above the 7,600 point mark after the government announced a revised plan to hike electricity rates in stages instead of the one-time increase it had previously aimed at implementing, dealers said. The revised electricity rate plan is expected to reduce the impact on the local economy, with many manufacturers likely to see smaller electricity bills than they had anticipated, which could lower their operating costs, the dealers said. Improvements in manufacturing activity in the United States and China also helped to lift investor confidence in the global economy, with buying focusing on large-cap local stocks, in particular in the electronics sector, to boost the index to close at almost the day's high, they added. The weighted index closed up 175.09 points or 2.33 percent at 7,676.81, after moving between 7,511.76 and 7,679.07, on turnover of NT$129.67 billion (US$4.46 billion). The market opened up 0.28 percent in a knee-jerk reaction to an overnight rise on Wall Street on a recovery in U.S. and China manufacturing activity data, the dealers said. Momentum accelerated as buying increased in electronics heavyweights to push the index over technical resistance ahead of the 7,600 point level, with more and more investors happy with the plan to implement electricity rate hikes in phases, they said. Mega Securities analyst Alex Huang said the bourse staged such a strong technical rebound after it had recently come under pressure amid concern over a possible capital gains tax on stock investments and fears about the one-time increase in electricity rates. "The local bourse had lagged behind its counterparts in the region and in the U.S. due to these negative internal factors," Huang said. "Today, however, many investors seemed to feel relieved." "Judging from the expanded turnover, I suspect that many bargain hunters turned active to chase prices amid improved sentiment due to the revised electricity rate increase plan," Huang said. Among the winning large-cap stocks, PC vendor Asustek closed up 7 percent, the maximum daily increase, at NT$315.50, after several foreign brokerages raised their target prices on the stock on the company's better-than-expected first quarter results. Smartphone supplier HTC rose 6.66 percent to end at NT$472.50 and cellphone camera lens maker Largan Precision gained 7 percent to close at NT$496.00. Huang said the expansion in turnover came partly from massive trading volume in shares of Hon Hai Precision Industry Co., which closed down 3.03 percent at NT$89.60 after suffering further selling due to the company's worse-than-expected results for the first quarter. "After today's advance, the market is moving closer to the nearest technical hurdle at around 7,800 points, and I expect heavy downward pressure ahead," Huang said. "Investors had better keep a keen eye on the run-off in the French presidential election scheduled for May 6, which could impact the financial situation in Europe," he said. At the end of the session, the machinery and electronics, and construction sectors scored the highest gains among the eight major stock categories, finishing up 2.8 percent. Textiles gained 2.7 percent, cement stocks rose 2.6 percent, financials added 2 percent, foodstuffs rose 1.7 percent, paper and pulp shares gained 1.4 percent, while plastics and chemicals closed up 1.3 percent. (By Frances Huang)


Updated : 2021-06-23 04:15 GMT+08:00