Taipei, March 16 (CNA) Shares in Taiwan closed above the 9,800 point mark Thursday after the U.S. Federal Reserve raised interest rates 0.25 percentage points, as anticipated by financial markets, and signaled a gradual rate hike cycle this year, dealers said.
Buying in large-cap stocks in the bellwether electronics sector appeared strong as investors were relieved by the Fed's move, while petrochemical stocks also gained on a rebound in international crude oil prices, dealers said.
The weighted index on the Taiwan Stock Exchange closed up 97.52 points, or 1.00 percent, at 9,837.83, after moving between 9,768.85 and 9,842.17. Turnover totaled NT$93.69 billion (US$3.05 billion) during the session.
The market opened up 0.29 percent in a knee-jerk reaction to a higher Wall Street, where the Dow Jones Industrial Average closed up 0.54 percent and the S&P 500 index ended 0.84 percent higher as sentiment was bolstered by the Fed's mild interest rate increase, dealers said.
Buying in market heavyweights, led by the world's largest contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC,台積電), vaulted the weighted index past 9,800 points in the morning session and it remained strong until the end, dealers said.
"The tone of the Fed's statement after Wednesday's rate hike signaled a gradual rate increase, which pleased many investors so they returned to the trading floor to buy," Concord Securities analyst Kerry Huang said.
The Fed hinted on Wednesday that it will raise interest rates three times this year, in line with its previous statement.
"With only two hikes left, the U.S. dollar dropped on the global market and more foreign funds are expected to enter the region," Huang said.
Judging from the gains by large-cap stocks, he said, it seemed that the buying largely came from foreign institutional investors as concerns faded over the rate hikes.
According to the TWSE, foreign institutional investors bought a net NT$12.58 billion worth of shares on the main board Thursday.
The electronics sector was the biggest beneficiary of the strong buying, gaining 1.19 percent, with the semiconductor sub-index rising 1.64 percent.
TSMC, the most heavily weighted stock on the local market, rose 1.88 percent to close at NT$190.00, with 31.51 million shares changing hands.
Largan Precision Co. (大立光), a smartphone camera lens supplier to Apple, gained 1.63 percent to close at NT$4,665.00 and remained the most expensive stock in Taiwan. Metal casing firm Catcher Technology Co. (可成), also an Apple supplier, rose 1.50 percent to end at NT$270.50.
Meanwhile, the petrochemical sector closed up 1.60 percent on the back of a more than 2 percent increase in international oil prices overnight.
Formosa Plastics Corp. (台塑) rose 1.45 percent to close at NT$90.70, Formosa Petrochemical Corp. (台塑化) gained 1.90 percent to end at NT$107.00, and Nan Ya Plastics Corp. (南亞) finished 2.86 percent higher at NT$71.90.
"With the weighted index breaching 9,800 points, the local main board has become technically healthier," Huang said. "As long as foreign investors keep moving funds into the region, the local equity market is likely to move even higher in the short term."
(By Frances Huang)