Taiwan shares end higher on Wall Street gains

Shares in Taiwan closed higher Thursday as investors took cues from a further upturn on Wall Street overnight to chase prices on the local main board, pushing up the weighted index to a new one-year high, dealers said.

The local spot equity market was also riding the wave of a strong showing made by the futures market, with investors rushing to pick up large-cap electronics stocks, such as Taiwan Semiconductor Manufacturing Co. (台積電) and Hon Hai Precision Industry Co. (鴻海), as foreign institutional investors still held a great number of long position futures contracts, the dealers said.

The weighted index on the Taiwan Stock Exchange (TWSE) ended up 48.88 points, or 0.54 percent, at 9,056.56, after moving between 9,009.79 and 9,075.89, on turnover of NT$99.15 billion (US$3.10 billion). The local main board hit a new high since July 9, 2015, when the index closed at 9,250.16 points.

The market opened up 2.54 points on a mild technical rebound, and buying accelerated on the back of a higher Wall Street, where the Dow Jones Industrial Average hit a record high overnight due to better-than-expected corporate earnings, the dealers said.

Interest continued to focus on the electronics sector amid optimism that the third quarter is a traditional peak season for the global high-tech industry, while buying also spread to select old economy and financial stocks to push up the index further at the close, they said.

"It was a liquidity-driven session in the local equity market at a time when the major central banks around the world have continued to ease their monetary policies," said Hua Nan Securities analyst Kevin Su. "More importantly, the global financial markets have anticipated that the U.S. Federal Reserve will not hike interest rates any time soon, he said.

"In reflection of such optimism toward liquidity, foreign institutional investors continued to hold a large chunk of long- position contracts in the futures market here, while picking up stocks in the spot market to profit in the futures," Su said. As of Wednesday, foreign institutional investors held a net of more than 60,000 long-position futures contracts.

According to the TWSE, foreign institutional investors bought a net NT$16.03 billion-worth of shares on the main board Thursday.

Su said that strong foreign institutional buying came behind the solid gains posted by electronics market heavyweights, in particular TSMC, the most heavily weighted stock in the Taiwan market.

TSMC gained 1.18 percent to close at NT$172.00, with 33.13 million shares changing hands, boosting its market capitalization to a record high. Led by TSMC, the electronics sector ended up 0.68 percent and the electronics sub-index closed up 0.98 percent.

Among other rising high-tech stocks, Hon Hai, an assembler of iPhones and iPads for Apple Inc., rose 1.63 percent to end at NT$87.40 on high hopes that the new generation iPhone models will raise its shipments for the second half of this year.

On the back of rising flat panel prices, AU Optronics Corp. (友達) rose 4.08 percent to close at NT$12.75, and Innolux Corp. (群創) added 4.44 percent to end at NT$11.75.

In the non-high-tech sector, China Steel Corp. (中鋼) gained 2.24 percent to close at NT$22.85, and Formosa Petrochemical Corp. (台塑化) rose 1.55 percent to end at NT$91.90, while Mega Financial Holding Co. (兆豐金) closed up 0.60 percent at NT$25.10.

"Judging by the daily turnover in recent sessions, the local main board remained technically sound without concerns about overshooting," Su said. "It is possible for the index to continue to move higher as long as foreign institutional investors buy more."

(By Frances Huang)