Taiwanese shares rose yesterday as investors responded to an overnight rally in the US triggered by the US Federal Reserve ruling out the possibility of overly aggressive rate hikes later in the year, dealers said.
The bellwether electronics sector attracted buying throughout the session as investors searched for bargains among heavily affected tech heavyweights, while the financial sector came under pressure to cap the upturn on the broader market, they said.
The TAIEX closed up 130.29 points, or 0.79 percent, at 16,696.12. Turnover totaled NT$250.848 billion (US$8.5 billion), with foreign institutional investors buying a net NT$3.83 billion of shares on the main board, Taiwan Stock Exchange data showed.
Photo: CNA
“The gains on the US markets came as investors felt relieved as the Fed did not appear as hawkish as previously expected,” Hua Nan Securities Co (華南永昌證券) analyst Lu Chin-wei said.
After a two-day policymaking meeting, which concluded overnight, the Fed raised its key interest rates by 50 basis points after a 25 basis point hike in March.
However, Fed Chair Jerome Powell ruled out more aggressive action, saying that the committee was not considering a 75 basis point increase.
“The 50 basis point rate hike at the May meeting had been widely anticipated by the markets worldwide. Now, Powell’s remarks simply prompted investors at home and abroad to buy, and in Taipei, tech heavyweights got a boost from reduced worries over a more aggressive Fed,” Lu said.
The electronics sector rose 1.29 percent and accounted for about 54 percent of yesterday’s total turnover, with the semiconductor subindex up 1.70 percent.
The transportation and steel sectors also rose 0.95 percent and 1.16 percent respectively, but the financial sector underperformed the TAIEX, closing down 1.02 percent.
“Judging from today’s movement, I suggest investors to stay alert over the weakness in the financial sector. The interest rate hike leads had been largely reflected in financial stocks’ recent gains,” Lu said. “The local main board is likely to rebound further, but if the TAIEX fails to close above 17,000 points, the gains would not be strong enough to lead the market to return to an uptrend at a time of a rate hike cycle.”
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