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 (
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 (
EVA Airways, the nation's second-biggest airline, added 1.3 percent to NT$15.20. China Airlines (
"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 (
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.
Mercuries Life Insurance Co (三商美邦人壽) shares surged to a seven-month high this week after local media reported that E.Sun Financial Holding Co (玉山金控) had outbid CTBC Financial Holding Co (中信金控) in the financially strained insurer’s ongoing sale process. Shares of the mid-sized life insurer climbed 5.8 percent this week to NT$6.72, extending a nearly 18 percent rally over the past month, as investors bet on the likelihood of an impending takeover. The final round of bidding closed on Thursday, marking a critical step in the 32-year-old insurer’s search for a buyer after years of struggling to meet capital adequacy requirements. Local media reports
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