Capitalization rises to record NT$28 tril.
April 5, 2014, 12:09 am TWN
TAIPEI -- The market capitalization of Taiwan's main equity markets has hit a record high at NT$28 trillion, driven largely by strong foreign institutional buying in recent sessions.
According to statistics compiled by the Taiwan Stock Exchange and the GreTai Securities Market (GTSM), the combined market capitalization of the main stock exchange and the over-the-counter (OTC) market totaled about NT$28 trillion (US$924 billion) as of Thursday.
After the weighted index on the TWSE closed at 8,888.54 Thursday, up 1.30 percent from March 28, the market value of the main board reached a fresh high of NT$25.3 trillion.
The index on the OTC ended at 147.49 Thursday, up 3.20 percent from March 28, to push its market capitalization to NT$2.7 trillion.
The FTSE TWSE Taiwan 50 Index, comprised of Taiwan's 50 largest market cap stocks, ended at 6,073.42 Thursday, up 0.96 percent from March 28.
The local market was closed Friday for a public holiday.
Foreign institutional investors have been key contributors to the upswing in market capitalization, serving as net buyers of shares 10 sessions in a row on expectations that the U.S. Federal Reserve will continue to pump funds into the market, analysts said.
During that time, they have bought a net NT$69.26 billion in shares, including a net purchase of NT$7.24 billion in shares on Thursday despite a mild correction that left the market's weighted index down 0.18 percent.
Foreign Institutional Investors Continue Buying
Foreign institutional investors have seemingly ignored the ongoing political standoff in Taiwan between the government and student protestors, who have occupied the Legislative Yuan chamber since March 18 to show their opposition to a trade-in-services agreement signed by Taiwan and China.
Since the beginning of this year, foreign investors have been net buyers of NT$104.7 billion in shares, according to the statistics.
Analysts said foreign investors have shown a preference for the bellwether electronics sector, in particular large-cap high-tech stocks, such as Taiwan Semiconductor Manufacturing Co. and smartphone camera lens supplier Largan Precision Co., which have sound fundamentals.
Shares of TSMC, the most heavily weighted stock in the local market, hit NT$121.00 at one point Wednesday, the highest in more than 13 years.
That pushed up the world's contract chip maker's market capitalization to a historical high of NT$3.13 trillion before the stock retreated, falling 1.25 percent on Thursday to close at NT$118.50.
Riding the wave of strong institutional buying, the market capitalization of the electrical/electronics sector has risen 4.9 percent in the four most recent sessions, the largest gain among the roughly 30 sectors in the market.
The steepest decline during the same period was seen in the food sector, which saw its market value fall 0.74 percent.
Meanwhile, the average price-to-earnings ratio on the main exchange at the end of March stood at 17.55, compared with 18.64 recorded at the end of February, while the average dividend yield rose to 3.47 percent from 3.26 percent a month earlier.