TAIEX hits record high, rising 2.55%

JUMPING STOCKS: Chipmaker TSMC accounts for about 41 percent of the TAIEX’s weighting, and its gain alone contributed about 595 points to the index’s advance

• By Crystal Hsu / Staff reporter

• • Add TT as Preferred Source

  • 

  • 

  • 

Taiwanese stocks surged to a record high yesterday, buoyed by a rebound in US technology shares after surprisingly weak US jobs data reduced expectations for another US Federal Reserve rate hike, analysts said.

The benchmark TAIEX rose 1,236.3 points, or 2.55 percent, to close at 49,712.04, extending its record-closing streak. Trading value expanded to NT$1.151 trillion (US$36.2 billion), signaling strong buying momentum, with heavyweight shares such as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) leading the gains.

The rally followed data released on Friday showing US nonfarm payrolls increased by just 29,000 last month, far below the expected 84,000, while the previous month’s figure was revised lower.

A smartphone screen shows Taiwan Semiconductor Manufacturing Co’s stock price movement at a brokerage firm in Taipei yesterday.

Photo: CNA

The US unemployment rate rose to 4.2 percent, and wage growth slowed, prompting markets to sharply reduce expectations for another Fed rate hike of 25 basis points at its meeting on Oct. 27.

The probability of a rate hike fell to 22.7 percent from 64.2 percent, Yuanta Securities Investment Consulting Co (元大投顧) said, citing market expectations.

The shift in rate expectations revived demand for technology shares, supporting Taiwan’s chip and electronics stocks, Yuanta said.

“Attention is now turning to September sales and third-quarter earnings,” Yuanta said, adding that TSMC’s coming earnings briefing could provide another catalyst for the market.

TSMC, the world’s largest chipmaker and accounting for about 41 percent of the TAIEX’s weighting, rose 3 percent to a record NT$2,575. Its gain alone contributed about 595 points to the index’s advance.

The chipmaker is to hold its investors’ conference on Thursday next week, when it should provide an update on its business and the broader semiconductor outlook.

Strong buying suggests that the TAIEX could continue to test new highs, Yuanta said.

Foreign institutional investors bought a net NT$71.9 billion of Taiwan shares on the main board yesterday, extending their buying streak to four trading sessions, Taiwan Stock Exchange data showed. Mutual funds sold NT$6.39 billion net, while proprietary dealers bought NT$10.95 billion.

Taiwan’s economic fundamentals are also providing support, with the government raising this year’s growth forecast to 11.05 percent, which would be the fastest pace in 39 years.

First Capital Management Inc (第一金投顧) took a positive view, but cautioned investors to monitor developments in the US-Iran conflict, oil prices, US Treasury yields, foreign investor positioning and the movements of the New Taiwan dollar.

The NT dollar strengthened 4.2 cents to NT$31.788 against the US dollar yesterday, ending two sessions of decline as the currency rose alongside the record-setting stock market.

However, the 10-year US Treasury yield’s rise to 5.28 percent could put a lid on further stock gains, First Capital said.

Higher bond yields make relatively safe US government debt more attractive compared with stocks, potentially prompting investors to shift money away from equities and leaving the market vulnerable to a pullback, it added.