Print

Mail

wiki links

Stocks jump on political developments

Taiwan's key stock index had its biggest gain in seven months after a second opposition politician headed for China, the nation's biggest trading partner, in an attempt to mend ties.

Hon Hai Precision Industry Co (鴻海精密) and EVA Airways Corp (長榮海運) led gains on optimism that improved relations with China will result in better investment and transport links.

The bottom for relations between China and Taiwan "may have passed and the ground has been laid for improved communication," Dickson Ho (何資文), head of research at Morgan Stanley in Taipei, wrote in a note dated yesterday. "We expect the market to react favorably to any positive developments on the political front."

The TAIEX jumped 123.82, or 2.1 percent, to 5,927.50, its biggest gain since Oct. 4.

More than five stocks advanced for every one that declined.

Futures due this month added 1.7 percent to 5,902.

Hon Hai Precision, the nation's largest electronics company by sales and which counts China as a manufacturing base, rose 2.5 percent to NT$144.50. Quanta Computer Inc (廣達電腦), which makes almost all its notebook computers in China, gained 3.7 percent to NT$53.10.

EVA Airways, the nation's second-biggest airline, added 1.3 percent to NT$15.20. China Airlines (華航), the largest carrier, rose 2 percent to NT$17.60.

"Tensions will soon be a thing of the past," said Phil Chen, who helps manage the equivalent of US$1.9 billion at Grand Cathay Securities Investment Trust Co (大華投信). "With the removal of political risk, Taiwan's stocks will shine."

Morgan Stanley Capital International Inc announced last June it will raise the weighting of Taiwan's stocks in global indexes to 100 percent from 75 percent on May 31. Investors may buy about US$4 billion of the nation's equities to track the benchmarks, analysts and investors said at the time.

"The timing is perfect for Taiwan stocks. We are seeing investors in Asian markets shifting investment to the island ahead of the MSCI index rebalance this month," said Jerry Chen, a fund manager at Taipei-based First Global Investment Trust Co (元大投信).

Overseas institutional investors bought a net NT$10.64 billion worth of shares on Thursday.
This story has been viewed 1840 times.