Stocks rose after the government assurances that it will boost share prices to curb market swings during the US-led war against Iraq. Chunghwa Telecom Co (中華電信) led gains.
The TAIEX rose 84.18, or 1.9 percent, to 4,599.25. MSCI Taiwan futures for February delivery in Singapore gained 1.9 percent to 198.10. The Taiwan Futures Index added 1.5 percent to 4,588. About four stocks gained for every one that declined.
"Promises to use market intervention measures have reassured investors that the market will not plunge during the US attack on Iraq," said Simon Chao, who manages US$18 million in equities at President Investment Trust Corp (統一投信).
Stocks fell as much as 0.2 percent after US forces began attacking Iraq. The index rose again after Premier Yu Shyi-kun assured the country will stabilize financial markets.
"Some investors are panicky, worrying the war will not be a quick one," said Phil Chen, who manages Grand Cathay Securities Investment Trust Co's (
The government may reduce its 7 percent daily limit on stock movements as one of three possible measures aimed at damping share-price swings or activating National Stabilization Fund to buy shares, Minister of Finance Lin Chuan (林全) said. The government will also consider closing the stock market if prices plummet, he told lawmakers on Wednesday.
The fund, which totaled NT$500 billion (US$14.4 billion) at its inception in 1998, is "prepared to intervene," Vice Minister of Finance Gordon Chen (陳樹) said this month.
Chen said the government might activate the fund during a war.
State-controlled companies such as Chunghwa Telecom and China Steel Corp (中鋼) advanced as some investors bet the government will buy shares of those companies to support the market.
* The TAIEX rose 84.18, or 1.9 percent, to close at 198.1
* Stocks gained at a ratio of 4 to 1.
* Chunghwa Telecom and China Steel were both boosted by government assurances.
* All eight major stock categories gained.
* Pulp and paper rose 3.2 percent.
* Plastics and chemicals gained 2.2 percent.
"Normally, the government will buy shares with the largest capitalization or state-controlled firms to boost the market," Chao said.
``Yes, war has started, but now people are starting to worry how the war will develop ahead,'' said Jack Shih, an assistant vice president at Daiwa Securities SMBC's in-house trading department.
Most retail investors will likely be watching the war closely for the next 10 to 15 days before they return to the market, traders said.
``However, a more long-term worry that we should also keep in mind is whether the economy will rebound after a war as expected,'' said Shih.
Taiwanese companies have filed a flurry of statements at the Taiwan Stock Exchange web site, saying the war is not having an impact on their businesses or finances.
All of the eight major stock categories gained ground, with pulp and paper issues moving up the most at 3.2 percent, followed by plastics and chemical stocks at 2.2 percent, electrical shares at 1.9 percent, textile issues at 1.5 percent, bank and insurance shares at 1.4 percent, cement stocks at 1 percent, construction stocks at 0.7 percent, and foodstuff shares at 0.2 percent.
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