Market uncertain after election

Shares closed more than 100 points higher yesterday on strong foreign investor buying, but no clear picture emerged for the stock market's likely movement today, as analysts remain concerned over post-election uncertainty in the US.

The benchmark TAIEX gained 103.24 points, or 1.79 percent, to close at 5,862.85. The market opened flat and closed at the highest point, with US President George W. Bush's leading his Democratic counterpart, Senator John Kerry.

"If Wall Street is jittery over the hotly-contested election, then Taiwan's stock market is likely to be impacted," said Stanley Yeh (葉德霖), an analyst with Yuanta Core Pacific Securities Corp (元大京華證券).

Foreign institutional investors yesterday bought a net NT$13.93 billion worth of Taiwan stocks, in anticipation of a proposed weighting-increase of Taiwan shares by Morgan Stanley Capital International (MSCI) by the end of the month.

The MSCI effect can be seen in the heavily-weighted electronics sector, which attracted buying from foreign investors and was up 3.02 percent yesterday, said Dave Chou (周顯黎), another analyst at Yuanta Core Pacific Securities.

Oil prices, Taiwan's year-end legislative elections and the verdict today on a lawsuit filed by opposition parties to suspend Chen Shui-bian's (陳水扁) and Annette Lu's (呂秀蓮) March 20 election victory are the major factors that will keep influencing the performance of the market in the near term, he said.

By and large, who is in the White House has little impact on local bourse and US-Taiwan trade prospects, Chou said.

As for how the US Presidential election results are going to affect Taiwan's economy, George Lin (林添貴), deputy secretary-general of the Chinese National Association of Industry and Commerce (工商協進會), said the industry had no clear indication, as both presidential aspirants did not lay out economic platforms that would effect US-Taiwan business ties.

But Minister of Economic Affairs Ho Mei-yueh (何美玥) told reporters yesterday that she hopes the suspended talks on a Trade and Investment Framework Agreement (TIFA) between Taiwan and the US will soon be resumed.

The minister further predicted that once the new US president officially assumes office, Taiwan-US economic and trade relations will improve. Taiwan is the eighth-largest trading partner of the US.

Wang Chun-jieh (王俊傑), a researcher at the Chung-Hua Institution for Economic Research (CIER, 中經院), said there won't be any new breakthroughs in the Taiwan-US Free Trade Agreement talks in the short term.

But he added that if Bush wins a second term, the two countries will be more likely to re-open the TIFA talks based on the existing model.