TAIEX, NT$ both up on influx of capital

Overseas investors bought more Taiwanese shares than they sold on all but one day this month, helping drive the benchmark TAIEX up 9.5 percent. The benchmark climbed 37.06, or 0.5 percent, yesterday to 7,477.30, its best close since June 2008.

The local dollar closed 0.3 percent higher at NT$32.410 versus the greenback, according to Taipei Forex Inc. It earlier touched NT$32.334, the strongest since June 2. The currency is “relatively stable,” the Central Bank of the Republic of China (Taiwan) said late Wednesday following a 0.4 percent advance.

According to foreign institutional investors, they favored especially Taiwan's IT shares, given several positive developments in the industry, including strong demands for iPhone 3G S, anticipations for Microsoft's Windows 7 operating system, and the upcoming one-week National Day break in China and Black Friday in the United States.

Black Friday refers to the Friday after Thanksgiving Day, which falls on the fourth Thursday of November in the United States. Black Friday is the official beginning of the Christmas shopping season. On that day, most stores turn profits, which are marked with black ink, as opposed to losses that are marked with red ink.

Yesterday, foreigners made net purchases of NT$14.3 billion, while the other two major institutional investors, namely investment trusts and securities firms, bought a net of NT$1.147 billion and NT$212 million, respectively. Altogether, the three institutional investors bought a net of NT$15.614 billion.

Stock benchmarks advanced across Asia's developing nations after a rise on Wall Street in overnight trading, as U.S. reports on industrial production and consumer prices showed the world's largest economy is emerging from a slump without spurring inflation.

The Dow Jones industrial average rose 108 points to another high for the year as General Electric Co. and International Business Machines Corp. jumped. It was the market's eighth gain in nine days. The broader Standard & Poor's 500 index rose 16.13, or 1.5 percent, to 1,068.76, while the Nasdaq composite index rose 30.51, or 1.5 percent, to 2,133.15.

Locally, the TAIEX opened yesterday up 62.45 points and stayed above Wednesday's close throughout the trade, even though sell orders began to emerge after noontime.

According to analysts, a rally will continue even as investors begin to sell short. As long as they don't buy to cover, a growth is still expected, analysts said.

In the currency market, the NT climbed to its highest level in more than three months after the island's government said it plans to sign a trade accord with China by May of next year, brightening the outlook for exports.

“Funds are flowing into high-yielding currencies and emerging markets,” said Tarsicio Tong, a foreign-exchange trader at Union Bank of Taiwan in Taipei. “The Taiwan dollar is under pressure to rise because of the general weakness of the U.S. currency.”

The central bank has “stepped back” from trying to counter appreciation, Patrick Bennett, a Hong Kong-based currency strategist at Societe Generale SA, wrote in a research note published yesterday. Buying the Taiwan dollar is his “favored Asia trade,” ahead of the Korean won. Policy makers can try to influence exchange rates by buying or selling currencies.

Recovery from a global recession is also encouraging investors to favor emerging markets. U.S. industrial output climbed 0.8 percent last month following a revised 1-percent increase in July, the Federal Reserve reported yesterday. Consumer prices increased 0.4 percent from the previous month.

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