TAIPEI (XFN-ASIA) - Share prices were sharply higher in morning trade on
hopes for improved cross-strait economic ties after opposition candidate Ma
Ying-jeou won a landslide victory in Taiwan's presidential 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 stuttering economy.
Ma won 58.45 pct of the vote in Saturday's election against 41.55 pct
garnered by Hsieh by pledging, among other things, to work for direct transport
links, increased tourist arrivals from the mainland and enabling Taiwan
financial firms to move into China.
Dealers said China ties are also expected to get a boost after two
referendums on Taiwan seeking to regain UN membership failed.
Ma will take office on May 20 when DPP's Chen Shui-bian steps down after
serving two four-year terms.
At 11.22 am, the weighted index was up 260.91 points or 3.06 pct at
8,785.90, after moving in the range of 8,782.37 and 9,049.23.
Turnover was 196.52 bln twd.
"Funds, including those parked inside and outside Taiwan, 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.
Technology firms may warrant some caution until their first-quarter results
are out next month, he said, pointing to worries over possible foreign exchange
losses due to a stronger Taiwan dollar.
Hsu noted that the market came off its early highs as some investors locked
in quick profits.
Investors had anticipated Ma's Victory, he said, noting gains prior to the
election day.
Michael On, president of Beyond Asset Management Co, said that the election
result was in line with expectations and that the local bourse could be poised
for an upswing for a few days.
There are expectations that rules governing cross-strait tourism and
transport links will be eased, he said.
Ma told reporters following his election victory that his priorities include
allowing more China tourists to visit Taiwan and enhancing air links.
The president-elect is expected to initially push for weekend charter
flights between the mainland and Taiwan before seeking direct scheduled air
links.
The weekend election was closely watched by Beijing after eight years of
recurring tensions under Chen's rule.
Alex Huang, an assistant vice president at Mega International Investment
Services, said the election has ended political uncertainty.
Ma's victory points to increased foreign capital inflows as well as the
return of local funds to the market, he said.
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.
Tseng said the market may consolidate next month as investors are likely to
step back as they wait to see how the new president will actually proceed with
his promise of bettering ties with the mainland.
Trade will also be marked by caution due to uncertainty over technology
firms' first-quarter earnings, he said, noting that the Taiwan dollar's steep
appreciation this year has cast doubts over export-oriented technology firms'
earnings.
Companies may not have sufficiently hedged against currency risks, he said.
In the financial sector, Cathay Financial was up 4.80 twd or 5.86 pct at
86.70 and Chinatrust Financial was up 1.30 twd or 4.33 pct at 31.35. .
Mega Financial was up 1.00 twd or 4.17 pct at 25.00 despite news that
Chinatrust Financial is selling 100 mln shares of Mega on the market.
TSMC gained 3.00 twd or 4.63 pct to 67.80 and UMC added 0.75 twd or 4.09 pct
to 19.10.
Asia Cement was up 2.20 twd or 4.07 pct at 56.30 after proposing 2.4 twd per
share cash dividend plus a 6 pct stock dividend for 2007.
Airlines were boosted by hopes for direct transport links with the mainland.
China Airlines was up 0.70 twd or 3.72 pct at 19.50 and EVA Air was up 0.95
twd or 4.87 pct at 20.45.
(1 usd = 30.50 twd)
philip.wang@afxasia.com
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