Local market soars on back of heavy financial stocks buying
Shares in Taiwan spiked Thursday to its highest level in seven and a half years, as buying rotated to the financial sector amid hopes that Taipei and Shanghai will launch a platform to trade stocks on both exchanges, dealers said.
The buying was focused on financial holding companies that have big securities business operations, since investors and securities were optimistic that they would benefit from such trade liberalization, dealers said.
The bellwether electronics sector extended its gains from the previous session, led by semiconductor stocks, as investors here were encouraged by the 1.37 percent gain by the Philadelphia Semiconductor Index overnight, dealers said.
The weighted index on the Taiwan Stock Exchange ended up 184.49 points, or 1.91 percent, at 9,797.49, after moving between 9,655.30 and 9,814.88. Turnover totaled NT$143.17 billion (US$4.60 billion) during the session.
The market opened up 0.56 percent on follow-through buying from the previous session and gained momentum as interest focused on large- cap financial stocks.
The buying was spurred by hopes that the proposed Taipei- Shanghai platform would be modeled on the Shanghai-Hong Kong Stock Connect that was launched last year, dealers said.
Buying was also seen in the high-tech and old economy sectors, which helped push the index past the 9,800-point mark at one point before some profit taking emerged late in the session, dealers said.
The financial sub-index closed up 4.65 percent. China Development Financial Holding Co. (
) and Fubon Financial Holding Co. ( ) rose by the maximum daily 7 percent to close at NT$11.80 and NT$61.70, respectively. Yuanta Financial Holding Co. ( ) gained 6.50 percent to end at NT$17.20.
“Looking at the strong buying in those financial stocks that have large securities operations, it seems many investors, in particular foreign institutional investors, are expecting a stock platform similar to the Hong KongShanghai link,” said investment consulting firm CMoney analyst Chen Wei-tai.
Hopes about a Taipei-Shanghai stock mechanism have been high since Jiang Yang ( ), vice chairman of the China Securities Regulatory Commission (CSRC), was reported as saying that the CSRC is studying the feasibility of such as a platform.
“With the strong buying
in financial stocks, the financial sector accounted for more than 20 percent of the total turnover today,” Chen said. “That’s why the local index was able to clear the technical hurdles ahead of 9,700 points.”
Meanwhile, the electronics sub-index closed up 1.61 percent and the semiconductor sub-index ended up 2.10 percent, led by Taiwan Semiconductor Manufacturing Co. (TSMC, ), dealers said.
TSMC rose 2.44 percent to close at NT$147.00. “TSMC, the most heavily weighted stock on the local market, also helped anchor today’s gains and the buying also spread to other integrated circuit stocks,” Chen said.
IC packaging and testing services provider Advanced Semiconductor Engineering Inc. (
) rose 1.48 percent to close at NT$44.60, and it competitor Siliconware Precision Industries Co. ( ) gained 4.31 percent to end at NT$52.00.
“After today’s upturn, the local bourse would need to pause before another takeoff,” Chen said. “Otherwise, the market would overheat technically, which would bode ill for future movement.”
He said investors should continue to pay attention to the current earnings season on Wall Street, which may affect global markets.