Taiwan’s Stocks Enter Bull Market as Earnings Help Lure Inflows

  • Taiwan got most inflows among Asian markets this year
  • Local dollar heads for strongest close since August 2015

Taiwan’s benchmark stock index entered a bull market as global investors poured cash into the island’s equities, drawn by upbeat earnings and high company dividends.

The Taiex index climbed 0.9 percent to close more than 20 percent above a three-year low on Aug. 24. Foreign funds have injected a net $1.5 billion of cash into Taiwanese stocks so far this month, taking inflows this year to $7.8 billion, the most among Asian markets tracked by Bloomberg. Taiwan’s dollar appreciated 0.4 percent to NT$31.947, set for the strongest close in 11 months.

The equity gains came amid bets the Federal Reserve won’t raise borrowing costs this year after the U.K.’s vote to leave the European Union. The Taiex’s dividend yield of 4.1 percent is nearly 51 percent higher than that for the MSCI Emerging Markets Index, while some of the island’s largest listed firms, including Taiwan Semiconductor Manufacturing Co., reported second-quarter earnings that beat estimates.

“This wave of gains has been due to loose liquidity and higher dividend yields on Taiwan’s stocks,” said Peter Tzeng, senior vice president at IBTS Investment Consulting Co. in Taipei. “Electronics companies’ earnings in the second quarter have been relatively optimistic.”

TSMC, Taiwan’s largest company by market value, this week forecast better-than-anticipated sales as Apple Inc. prepares to introduce its latest iPhone and Chinese smartphone brands contributed to demand. Formosa Petrochemical Corp. and Nan Ya Plastics Corp., also among the island’s five largest firms by capitalization, posted second-quarter earnings that exceeded estimates.

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