TAIPEI (Taiwan News) — The Taiwan stock market closed higher Thursday, buoyed by hopes for a Russia-Ukraine ceasefire.
The Taiwan Stock Exchange Capitalization Weighted Stock Index (TAIEX) closed up 109.66 points at 23,399.41. Turnover totaled NT$377.4 billion (US$11.5 billion), per CNA.
Among the three major weighted stocks, TSMC fell NT$10 (31 cents) to close at NT$1,090. Foxconn gained NT$3, finishing at NT$180, while MediaTek climbed NT$35 to NT$1,520.
Trump's discussions with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky spurred optimism in post-war reconstruction concept stocks. These include the petrochemical, steel, plastics, cement, and shipping sectors, per CTEE.
Previously underperforming petrochemical stocks rebounded. Formosa Plastics, Nan Ya Plastics, and Formosa Chemicals & Fiber gained more than half a limit-up by the close.
The steel sector also saw strong gains, with China Steel surging 8.96% to close at NT$21.9. Several other steel stocks, including Yieh Hsing, Chung Hung, Tycoons Group, Sinkang Industries, YC Inox, and Hai Kwang, hit the limit-up.
Shipping sector outlook
If the war ends, Ukraine's reconstruction efforts will drive demand for transporting steel, cement, and other materials. Meanwhile, grain exports from the Mediterranean region are expected to rebound significantly, further strengthening the shipping sector, per CTEE.
The first quarter is traditionally the low season for shipping, with the benchmark Baltic Dry Index averaging around 1,000 points and reaching about 2,000 points in peak seasons. Institutional investors believe that if the Russia-Ukraine war ends and reconstruction begins, it would significantly boost the sector.
Currently, shipping stocks have relatively low valuations. Historical data shows that the BDI has an 80% probability of rising in February over the past decade, supporting a positive stock valuation outlook.
Additionally, Guinea’s mining region in West Africa is set to begin production in the second half of the year. The region’s iron ore will primarily be shipped to China, increasing transportation distances and demand for Capesize carriers.
Overall, factors such as China’s post-holiday industrial recovery, post-war reconstruction opportunities, and high dividend yields contribute to an optimistic outlook for the shipping industry.
Market analysis
Taishin Securities Investment Advisory Deputy General Manager Huang Wen-ching (黃文清) said Trump’s policy uncertainties have kept the Taiwan market in a consolidation phase since late last year, with resistance at the top and support at the bottom. He noted that while AI stocks led the market last year, their prices have pulled back this year, triggering a sector rotation as capital moves elsewhere.
Traditional industries with lower valuation bases, such as petrochemicals and steel, performed strongly due to expectations of post-war reconstruction and possible stimulus measures from China’s upcoming "Two Sessions." This year, the meetings will begin on March 4, bringing National People's Congress deputies and Chinese People's Political Consultative Conference members from across the provinces to Beijing, according to CW.
During the sessions, officials will collectively endorse the policy direction for the coming year. In addition to setting economic targets, the Chinese government will present central and local budget drafts in the Two Sessions reports.
Huang cautioned that these gains should be viewed as short-term rebounds, requiring further observation to determine if fundamentals can support continued growth.
Senior analyst Chien Po-yi (簡伯儀) noted that the market has the potential for a short-term rebound. While the TAIEX has limited room for growth, small and mid-cap stocks with specific themes still offer bullish trading opportunities.
