Taiwan shares close higher, but turnover still low

Taiwanese shares closed higher yesterday, but turnover remained low as investors stayed cautious ahead of a US Federal Reserve policy decision due later in the day, with high expectations of a rate hike.

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) closed unchanged at NT$2,380. The stock, which went ex-dividend yesterday, returned to its pre-ex-dividend price within 27 minutes of the market opening.

The quick recovery indicated investor confidence in the outlook for TSMC, a major beneficiary of the artificial intelligence (AI) boom, despite investor concern about the possibility of a rate hike by the Fed.

A man walks past an electronic stock board at the Taiwan Stock Exchange in Taipei on July 31.

Photo: CNA

The optimism over AI-related demand also supported shares of memory suppliers and some electronic component makers, with Nanya Technology Corp (南亞科技) rising 5.96 percent and Winbond Electronics Corp (華邦電子) gaining 5.96 percent.

The TAIEX ended up 337.41 points, or 0.74 percent, at 45,848.9. However, turnover of NT$643.7 billion (US$20.19 billion) was below the average of NT$689 billion over the previous five sessions, Taiwan Stock Exchange data showed.

“Today’s gains were technical in nature as the TAIEX rebounded from losses in the past few sessions,” Hua Nan Securities Co (華南永昌證券) analyst Kevin Su (蘇俊宏) said.

Over the previous four sessions, the TAIEX had fallen 1,671.87 points, or 3.54 percent.

“But investors showed little interest in chasing prices as many of them awaited the Fed’s decision and signals about its next move,” Su said, adding that investors were focused on comments from Fed Chair Kevin Warsh and the Fed’s dot plot, which shows policymakers’ projections for interest rates.

There is widespread expectation that the Fed would hike rates for the first time in three years as inflation remains elevated in the US and above the Fed’s 2 percent target.

“Today, financial stocks moved higher on hopes that a rate hike by the Fed will boost their overseas interest income,” Su said.

Cathay Financial Holding Co (國泰金控) gained 2.27 percent and Fubon Financial Holding Co (富邦金控) rose 1.32 percent yesterday.

“Taiwan’s central bank will make its [monetary] decision [on] Thursday afternoon,” Su said. “If the central bank follows its foreign counterparts in raising rates, the TAIEX could be affected.”