Taiwan shares end up on liquidity-driven trade

Taipei, Aug. 5 (CNA) Shares in Taiwan moved higher Friday amid ample liquidity after the Bank of England (BOE) cut its key interest rates and came up with more quantitative easing measures a day earlier to take on the impact resulting from the Brexit vote, dealers said.

Strong interest in large-cap stocks across the board, in particular in the bellwether electronics sector, pushed up the broader market to breach the 9,100 point mark at one point before coming off the high by the end of the session, they said.

The weighted index on the Taiwan Stock Exchange (TWSE) closed up 67.41 points, or 0.75 percent, at 9,092.12, after moving between 9,023.23 and 9,101.71, on turnover of NT$82.60 billion (US$2.61 billion).

The market opened up only 1.05 points on a lackluster Wall Street overnight, but momentum accelerated as equity investors here witnessed further fund inflows into the regional markets, including Taiwan, after the BOE cut interest rates for the first time in seven years and moved to raise bond purchases, dealers said.

Buying focused on market heavyweights, such as Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, and integrated circuit designer MediaTek Inc. as well as select old economy stocks, to maintain momentum until the end of the session, they said.

"It was another liquidity-driven session today. I think foreign institutional investors encouraged by the BOE's move served as a driver of the upturn on the local main board," said Ta Ching Securities analyst Andy Hsu.

Along with a 0.25 percentage point rate cut, the BOE also announced a hike of 60 billion British pounds (US$78.6 billion) in the government bond buying program after the bank concluded a policymaking meeting Thursday.

"The BOE's QE simply raised the liquidity levels in the global financial markets, creating spill-over effects into theregion," Hsu said. "A stronger Taiwan dollar today is evidence that foreign investors moved more of their funds into the country, giving a boost to the equity market."

According to the TWSE, foreign institutional investors bought a net NT$12.03 billion worth of shares on the main board Friday. As they have done in recent sessions, Hsu said, foreign institutional investors rushed to pick up large-cap stocks Friday as these stocks were the favorites of foreign investors. In the electronics sector, which closed up 0.73 percent, TSMC, the world's largest contract chip maker, gained 1.43 percent to end at NT$177.00 with 25.75 million shares changing hands, while MediaTek, which climbed from the doldrums of a 2.61 percent fall, bounced back by 2.68 percent to close at NT$249.00.

Among other rising high-tech stocks, smartphone brand HTC Corp. gained 4.27 percent to end at NT$102.50, and flat panel maker AU Optronics Corp. added 2.69 percent to close at NT$13.35.

"High-tech heavyweights have gained sharply in recent sessions. As long as foreign institutional investors continue to buy, these stocks could enjoy more upward movement without apparent short-term technical resistance," Hsu said. In the non-high tech sector, China Steel Corp., Taiwan's largest steel maker, rose 0.89 percent to end at NT$22.60, Taiwan Cement Corp. gained 1.16 percent to close at NT$34.90, and Formosa Plastics Corp. added 1.55 percent to end at NT$78.60. Fubon Financial Holding Co. closed up 1.76 percent at NT$40.45. (By Frances Huang)