Taiwan's stock market experienced a significant boost on Monday, with shares closing sharply higher. This surge was attributed to the optimism surrounding trade talks between the United States and China, as well as expectations of an interest rate cut by the U.S. Federal Reserve. Dealers noted that the buying momentum was sparked by these positive developments.
However, the Taiex index, which represents the Taiwan Stock Exchange, failed to sustain its gains above the 28,000-point level. The contract chipmaker, Taiwan Semiconductor Manufacturing Co. (TSMC), saw its shares retreat from the day's high, leading to a slight pullback in the overall market.
The Taiex ended the day at 27,993.63, a 1.68% increase from its opening level. Trading volume was robust, totaling NT$548.05 billion. Masterlink Securities analyst Tom Tang attributed the local market's performance to the positive sentiment surrounding U.S.-China trade negotiations. He highlighted that investors were encouraged by the framework agreement reached by negotiators ahead of the Trump-Xi meeting in South Korea.
"Buying activity was concentrated in the tech sector, as investors anticipated a rate cut by the Fed following the release of cooler-than-expected inflation data for September," Tang explained. He further emphasized that lower interest rates would make tech stocks more appealing due to their attractive dividend yields.
TSMC, the largest local stock by market capitalization, closed 2.07% higher at NT$1,480.00. Its retreat from the day's high had a notable impact on the Taiex, costing the index approximately 160 points. Tang suggested that the NT$1,500 mark may have acted as a psychological barrier for some investors, but he emphasized the solid fundamentals of TSMC, driven by the booming artificial intelligence (AI) development sector.
Other semiconductor stocks also performed well. MediaTek Inc., a smartphone IC designer, rose 3.09% to close at NT$1,335.00, while ASE Technology Holding Co., an IC packaging and testing services provider, gained 3.32% to end at NT$202.50. Nanya Technology Corp., a memory chip supplier, soared by the maximum daily limit of 10%, closing at NT$120.00.
The AI wave also lifted stocks of Hon Hai Precision Industry Co., an iPhone assembler and AI server maker, which gained 3.14% to close at NT$246.50. Quanta Computer Inc., another AI server supplier, saw its shares rise by 5.45% to end at NT$309.50.
Tang noted that the strong performance of AI-related stocks contrasted with the lagging performance of non-tech industries. Eclat Textile Co. and Makalot Industrial Co., for instance, both saw declines of 1.71% and 3.14%, respectively. Tung Ho Steel Corp. and China Steel Corp., the largest steel maker in Taiwan, also experienced losses of 1.44% and 0.26%, respectively.
Not all sectors were in the red, though. Hua Eng Wire and Cable Co. rose 5.33% to close at NT$31.60, and Walsin Lihwa Corp. gained 3.22% to end at NT$30.45, benefiting from higher copper prices.
In the financial sector, Mercuries Life Insurance Co. stood out with a 10% surge, closing at NT$7.39, amid reports of a potential acquisition by E. Sun Financial Holding Co. However, E. Sun Financial itself shed 7.02% to close at NT$30.30.
Tang cautioned investors that, despite the framework agreement, uncertainties remain ahead of the formal Trump-Xi meeting. He emphasized the need for close monitoring of the proceedings, as the outcome could significantly impact market sentiment and stability.
According to the Taiwan Stock Exchange, foreign institutional investors were net buyers on Monday, acquiring NT$32.64 billion worth of shares on the main board.
This market movement highlights the intricate relationship between global economic events, investor sentiment, and stock market performance. It remains to be seen how the U.S.-China trade negotiations and the Fed's rate decision will shape the future trajectory of Taiwan's stock market.
