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US rally boosts local market to above 8,500 points

TAIPEI--Shares in Taiwan closed above the 8,500-point mark Wednesday as investors were encouraged by a rally on Wall Street overnight after the congressional testimony of Janet Yellen, the U.S. Federal Reserve's new chairwoman, dealers said.

The bellwether electronics sector posted gains, led by large-cap stocks, on the back of a rise in the tech-heavy Nasdaq index, and the financial sector attracted bargain hunters to push the index higher at the close, they said.

The weighted index on the Taiwan Stock Exchange closed up 80.31 points, or 0.95 percent, at the day's high of 8,510.87 after hitting a low of 8,471.51, on turnover of NT$96.02 billion (US$3.17 billion).

The market opened up 0.49 percent on Wall Street's gains, and momentum accelerated with electronics heavyweights, such as integrated circuit designer MediaTek Inc. and PC vendor Asustek Computer Inc., moving higher throughout the session, dealers said.

Buying spread to the non-high tech sector, in particular financial stocks, to vault the index past 8,500 points at the close for the first time since Jan. 24.

“Wall Street's gains gave a boost to the local bourse amid rising optimism toward the global economy after Yellen's testimony,” Mega International Investment Services Corp. analyst Allen Huang said.

Yellen told a congressional committee that the U.S. economy has strengthened and that she saw few risks that could derail a plan to steadily reduce the Fed's bond purchases.

“More importantly, Yellen said the Fed will continue to leave interest rates at historic lows, which eased concerns over a potential interest rate hike,” Huang said. “It was no surprise that the Taipei market extended its momentum from a day earlier.”

In the electronics sector, which ended up 1.37 percent, MediaTek rose 3.58 percent to close at NT$434.00 after foreign institutional investors were net buyers of the stock for the fifth consecutive session.

“I am upbeat about MediaTek on the back of solid demand for smartphone chips from China. The launch of the world's first eight-core chip for 4G LTE services is expected to serve as a driver of MediaTek's growth this year,” Huang said.

Asustek gained 2.11 percent to close at NT$290.00 after Morgan Stanley and HSBC Securities raised their target prices on the stock to NT$345.00 and NT$334.00, respectively, from NTT$240.00 and NT$229.00.

Largan Precision added 1.67 percent to close at NT$1,215.00, while Hon Hai Precision Industry Co., which assembles iPhones and iPads for Apple Inc., rose 2.36 percent to end at NT$82.30.

In the financial sector, Fubon Financial Holding Co. gained 1.19 percent to close at NT$42.60, and Cathay Financial Holding Co. rose 1.22 percent to end at NT$45.60.

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