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Local market boosted by gains made on Wall Street

TAIPEI--Shares in Taiwan closed higher in the wake of gains posted on Wall Street overnight, in particular after the S&P 500 index breached 2,000 points for the first time ever, dealers said.

The weighted index on the Taiwan Stock Exchange ended up 91.63 points, or 0.97 percent, at 9,485.59, after moving between 9,426.29 and 9,491.75, on turnover of NT$115.24 billion (US$3.84 billion).

Market Sentiment Improves

Mega International Investment Services Corp. analyst Alex said that as the S&P 500 index closed above the 2,000 point level overnight, many investors have stronger confidence that the global equity markets will fare well in the near term.

"Therefore, many investors appeared willing to return to the market, picking up high-tech stocks today. It was good for the electronics sector, which served as a driver to today's gains and became the mainstream for the upward movement, and I expect that the index could easily breach 9,500 points and even challenge 9,600 points soon," Huang said.

"After consolidating in the past few sessions, downward pressure was largely absorbed," Huang said. "Today, investors simply seized the gains on Wall Street as a reason to buy, helping the local market make a comeback."

The market opened up 0.34 percent in a knee-jerk reaction to a gaining Wall Street overnight, and momentum continued, with high-tech stocks returning to an upturn, the dealers said.

A higher electronics sector prompted more investors to jump onto the trading floor and led buying to spread to the non-high-tech sector to lift the index closer to the 9,500 point mark at the close, they said.

Amid optimism toward the global equity markets, buying in the local market rotated to the bellwether electronics sector, where opto-electronics stocks, especially flat panel firms such as Innolux Corp. (群創光電) and AU Optronics Corp. (AUO,友達光電) led the gains on hopes that peak season effects in the third quarter will strengthen their profitability, the dealers said.

Hi-tech Sector Outperforms

The electronics sub-index closed up 1.05 percent and the opto-electronics sub-index ended up 2.31 percent.

"The upturn of flat panel stocks, in particular major suppliers Innolux and AUO, acted as a driver for the electronics sector. It seems that many investors have embraced high hopes that they will report an improvement in results for the third quarter, a traditional peak season in the industry," Huang said.

AUO gained 6.55 percent to close at NT$14.65, while Innolux added 7 percent, the maximum daily increase, to end at NT$15.00.

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