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Cross-strait outlook boosts stock market to a two-year high

Shares surged to a two-year high yesterday on fresh hopes for improving trade and tourism ties with China.

The bourse also benefited from the resumption of margin trading for some stocks and Cabinet's approval of statutory revisions raising the ceiling on insurers overseas and mutual fund investments, dealers said.

The TAIEX rose 47.24 points, or 0.7 percent, to 6,855.74, its highest level since April 14, 2004, when the index closed at 6,880.18.

Turnover was NT$130.77 billion (US$4.02 billion).

Yesterday, former Chinese Nationalist Party (KMT) chairman Lien Chan (連戰) left for China to attend a two-day seminar about trade and tourism links.

"People now believe Taiwan may soon allow Chinese tourists to visit Taiwan," said George Wu (吳裕良), a fund manager at Invesco Taiwan Ltd (景順投信).

"And that's positive for the stock market. Taiwan shares, which lagged Asian stocks, are finally playing catch-up," Wu said.

Tourism shares surged 6.7 percent overall. Hotel Holiday Garden Co (華園) rose 6.9 percent to NT$31.6 and First Hotel Co (第一) gained 7 percent at NT$23.8. China Airlines Ltd (華航) rose 3.3 percent to NT$15.55 and Eva Airways Corp (長榮) gained 4.6 percent to NT$13.55.

Jih Sun Securities Investment Consulting Co (日盛投顧) deputy manager Kevin Chung (鐘國忠) said the market was also supported by the fact that "a total of 300-400 companies resumed margin trading today, injecting momentum into the local bourse."

Their shares were suspended from margin trading recently to comply with rules for companies planning their annual shareholders' meetings soon.
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