TAIEX ends slump, rises 3.18 percent

Shares yesterday surged more than 200 points, prompted by overnight gains on Wall Street and the thinning of the political cloud that has depressed the TAIEX for the past three days, analysts said.

The TAIEX jumped 209.05, or 3.18 percent, to close at 6,787.03 points, the biggest gain in seven months.

Risers led decliners 801 to 103, with 74 stocks unchanged. Some NT$174.79 billion-worth of shares changed hands yesterday, compared with NT$117.73 billion the previous day.

Traditional industries led the gains, with the paper-making sector rising 4.3 percent and construction 3.8 percent. The food sector -- led by Uni-President Enterprises Corp (統一企業), which gained 6.2 percent to NT$20.9 -- gained 3.6 percent.

High-tech shares also bounced back. Chi Mei Optoelectronics Corp (奇美電子), one of the nation's largest flat-panel makers, rose NT$3.5, or 6.3 percent, to NT$55.5. Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world's No.1 made-to-order chipmaker, added 2.4 percent to NT$62.

"I think local investors are regaining confidence as market watchers remain optimistic about the long-term perspective despite the short-term political uncertainty," said Daniel Tseng (曾建銓), a manager at Fubon Securities Investment Services Co (富邦投顧).

The TAIEX had lost almost 3.3 percent since Monday after former Tuntex Group chairman Chen Yu-hao (陳由豪) held a press conference in Los Angeles, California, to claim that President Chen Shui-bian (陳水扁) and his wife had lied about campaign contributions.

Following a wave of panic selling at that time, some investors believed it was a good time for some bottom-fishing, Tseng said.

Local investment trusts bought a net NT$1.99 billion of stocks yesterday, and proprietary traders bought a net NT$6.78 million. Overseas investors, who own about a fifth of Taiwanese stocks by market value, sold a net NT$11.89 billion worth of stocks yesterday.

Liu Ling-chun (劉玲君), associate manager at JF Taiwan Ltd (怡富投顧), said she believed the pullout of foreign capital was a move of arbitrage, instead of a sign that overseas investors are pessimistic over the local bourse.

Despite the market's strong rebound yesterday, Liu said the final day of trading before Saturday's presidential election was unpredictable.

"Investors may be willing to fuel up the market, but some may instead sell their stocks before a possible slump after the election," she said.

Fubon's Tseng predicted the benchmark index may drop slightly on the eve of the election as the political uncertainty may worry investors, but the stock market was still fundamentally sound.

To avoid risks, he therefore suggested investors who intend to buy today to shun shocks that lean toward specific political stances and choose those with a sound financial structure and development.