(Bloomberg) -- Taiwan's benchmark stock gauge is on track to enter a bull market as trading resumed after the Lunar New Year holidays, with a broad rebound in chip shares boosting foreign buying in the market. The Taiwan dollar also strengthened.
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The benchmark Taiex index rose as much as 3.6% Monday, its best day since Nov. 11. That took intraday gains from an October low to over 21%. Taiwan Semiconductor Manufacturing Co. and MediaTek Inc. contributed the most to the index's advance.
Speculation that the Federal Reserve is nearing the end of its aggressive interest rate hike cycle along with broad optimism in the region due to China's reopening have spurred a comeback for the tech-heavy market after stocks slid for most of 2022. Taiwan's stock gauge fell 22% last year.
Big investors including Warren Buffett are also betting that the worst is over for chipmakers amid attractive valuations and easing tensions between China and the US. Foreign funds have snapped up $4.6 billion in shares year-to-date, according to Bloomberg-compiled data.
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Goldman Sachs Group Inc. upgraded Taiwan to market-weight from underweight late Friday, citing positive trade exposure to China's reopening, a strong tech cycle recovery in the second half, and reduced near-term geopolitical risks as among tailwinds for the market.
Meanwhile, the Taiwan dollar advanced to the strongest level since August, rising as much as 0.8% to 30.12 versus the greenback.
"TWD is playing catch-up to gains in regional fx as markets reopened from week-long holidays. Sentiments remain conducive with the Taiex, Philadelphia Semiconductor Index extending gains while China reopening story supports growth hopes," said Christopher Wong, foreign exchange strategist at Oversea-Chinese Banking Corp in Singapore.
--With assistance from Chester Yung.
(Updates throughout.)
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