Taiwan stocks ended 1.2 percent higher in an across-the-board advance on Friday touched off by tireless foreign buying in index heavyweights like TSMC after a strong performance in US share markets. The TAIEX share index closed with a gain of 70.58 points to close at 5,931.31, powering 4.86 percent higher since Monday's session, when it had threatened to revisit a more than two-month low.
Blue chip techs like Taiwan Semiconductor Manufacturing Co (TSMC) helped spark the advance as Morgan Stanley Capital International prepares to hike Taiwan's weightings in its closely-tracked global indices on November 30.
TSMC gained 0.42 percent, down from intraday gains as high as 2.1 percent as domestic fund managers took profits on the rise, though it emboldened locals to buy their favourites in the industrial sector.
"The amount of money that could be going into electronics this month is almost scary," said Richard Tsai, vice president of research at Grand Cathay Securities, quoting foreign brokerage estimates of around US $70 billion. "Foreign funds invest for the long term. They don't care about a 100-200 point difference in the index if they need to build up a position."
"But locals like myself might be thinking 'I lost money when the index went down to 5,600 and I'm finally in the black. I have a chance to get out'," he said, referring to electronics sector investments.
The Dow Jones industrial average gained 1.75 percent on Thursday, its biggest rise in 13 months, to set the stage for Taiwan's early gains.
All sector indices ended higher, but industrials outpaced tech shares after the first half hour of session as domestic fund managers picked up issues battered by China's surprise interest rate hike last week.
Far Eastern Textile, Taiwan's biggest textile firm, surged 4.2 percent to T$24.80, while Uni-President Enterprises, a food conglomerate with major operations in China, jumped 5.88 percent to T$16.20. The day's market turnover was busy at T$98.22 billion, expanding from Thursday's moderate T$74.17 billion.
While analysts see little staying power to the industrial sector rebound, the electronics sector is expected to continue powering higher this month thanks to overseas fund managers.
Foreign investors accumulated a net T$33.9 billion in local shares in the first four sessions of the week, focusing mainly on big-capitalisation technology shares.
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