Taipei, July 3 (CNA) United Microelectronics Corp. (UMC), the second largest contract chip maker in Taiwan, was the stock that generated the most interest from foreign institutional investors in the week to June 30, the Taiwan Stock Exchange (TWSE) said Monday.
According to data compiled by the exchange, foreign institutional investors bought a net 391.18 million UMC shares last week, the most for any stock on Taiwan's market.
Ranking behind UMC were flat panel makers AU Optronics Corp. (AUO) and Innolux Corp., which were the targets of foreign investor net buys of 198.07 million shares and 65.55 million shares, respectively.
The aggressive buying pushed UMC shares up 15 percent during the week, while AUO shares rose 8.17 percent and Innolux gained 4.26 percent.
The strong foreign institutional interest in UMC largely reflected its relatively low valuation compared with Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chip maker.
Before the strong showing in the week to June 30, UMC had gained 12.28 percent since the beginning of the year, while TSMC, the most heavily weighted stock in the local market, had added almost 20 percent.
Hon Hai Precision Industry Co. saw the biggest sell-off by foreign institutional investors who sold a net 45.98 million Hon Hai shares during the week, followed by TSMC (21.60 million shares) and Pacific Construction Co. (9.28 million shares).
Foreign investors bought a net NT$20.45 billion (US$672 million) in shares during the week, bringing their net buy for the first half of the year to NT$266.27 billion, according to TWSE data.
Chou Chun-hung, the manager of the CTBC Taiwan Small-cap Fund, said foreign investors have continued to move funds into the region, boosting market liquidity and serving as an anchor for local equity prices.
But with the weighted index breaching the 10,000 point mark for the first time in 17 years in mid-May and hitting a 27-year high in June, the market's upward momentum has slowed to some extent and its future direction will depend on what foreign investors do, Chou said.
He added, however, that companies' bottom lines are expected to improve in the third quarter, a traditional peak season for the bellwether electronics sector, and the favorable trend could lend support to stock prices.
In the first half of the year, the weighted index on the main board rose 1,141 points, or 12.3 percent.
As of June 30, foreign institutional investors accounted for 41.66 percent of the total market capitalization on the main board, the TWSE said.
