TAIPEI (XFN-ASIA) - Share prices closed sharply higher in active trade as
investors cheered opposition candidate Ma Ying-jeou's victory in Taiwan's
presidential election over the weekend.
Gains were spread across the board, but dealers noted that tourism and
construction firms outperformed on hopes for more China-related business
following the election.
Kuomintang party's Ma trounced Frank Hsieh of the ruling Democratic
Progressive Party (DPP) in a campaign centred on improving relations with China
and reviving the island's faltering economy.
"The post-election rally is likely to run for at least a couple of sessions
before the market heads for consolidation," said Alex Huang, an assistant vice
president at Mega International Investment Services.
Although some profit-taking is likely, removal of political uncertainty
should help the market hold up well in the near term, he said.
Ma has pledged, among other things, to work for direct transport links with
the mainland, facilitating increased tourist arrivals and enabling Taiwan
financial firms to move into China.
Dealers noted that China ties are also expected to get a boost after two
referendums over UN membership for Taiwan failed.
The weighted index closed up 340.36 points or 3.99 pct at 8,865.35, after
moving in the range of 8,781.02 and 9,049.23.
Turnover expanded by 58 pct from the previous session to 270.87 bln twd.
The tourism sector was up 6.82 pct, construction sector was up 6.73 pct and
cement sector added 6.29 pct.
The financial sector was up 5.86 pct, paper sector up 5.69 pct, textile
sector up 5.36 pct, food sector up 5.10 pct, plastics/petrochemical sector
gained 4.82 pct and transport sector added 3.72 pct.
The electronics sector put in the smallest gain at 2.83 pct.
"Funds are waiting for an opportunity to get on the (equity) bandwagon...
anticipating a thaw in longstanding tensions across the Taiwan Strait," said
Michael Hsu, an assistant vice president at Taiwan Life Asset Management.
Financial, transport and tourism-related stocks as well as companies having
large real estate holdings will be in focus as they are expected to benefit most
from improved economic ties with China, he said.
Huang of Mega International noted that there was profit-taking in technology
firms due to worries over potential foreign exchange losses amid the local
currency's gains.
The Taiwan dollar surged on the back of capital inflows due to expected
strength in local equities following the election. It closed the morning at
30.218 to the US dollar, up from the previous close of 30.550.
Huang said the currency factor will result in technology stocks
underperforming, although the broader market will benefit from capital inflows.
He said the scenario is unlikely to change until the second half of the year
when the US economy may start showing signs of a turnaround.
Alan Tseng, a vice president at Capital Securities, said the "odds are that
the market will attain a high of 9,200 points by the end of the month."
The prospects for a more accommodative China policy should support the
market for a while, although investors would seek to lock in profits at every
available opportunity, he said.
Risers led decliners 1,974 to 307, with 193 stocks unchanged.
A total of 173 stocks closed limit-up and 19 limit-down.
Among tourism stocks, Formosa International Hotels rose 33.00 twd to 518.00
and Ambassador Hotel was up 3.60 twd at 55.10. Both were limit-up with 7 pct
gain.
In the financial sector, Cathay Financial was limit-up 5.70 twd at 87.60 and
Chinatrust Financial was 0.95 twd or 3.16 pct higher at 31.00.
Mega Financial was up 0.85 twd or 3.54 pct at 24.85 despite news that
Chinatrust Financial is selling 100 mln Mega shares on the market.
Airlines were higher on hopes for direct transport links with the mainland.
EVA Air was limit-up 1.35 twd at 20.85 while China Airlines was up 0.50 twd or
2.66 pct at 19.30.
Asia Cement was up 3.10 twd or 5.73 pct at 57.20 after proposing 2.40 twd
per share cash dividend plus a 6 pct stock dividend for 2007.
TSMC gained 2.60 twd or 4.01 pct to 67.40 and UMC added 0.70 twd or 3.81 pct
to 19.05.
(1 usd = 30.20 twd)
philip.wang@afxasia.com
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