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TAIEX breaks past 7,000 mark

"The improved cross-strait economic ties apparently gave the broad market a boost."

Frank Lin, senior vice president with Fubon Securities

Share prices rose 0.68 percent yesterday to close above 7,000 points for the first time in 25 months after Beijing unveiled a series of sweeteners to boost tourism, trade and other links, dealers said.

Chen Yunlin (陳雲林), director of the China's Taiwan Affairs Office, made the policy announcement after an economic and trade forum in Beijing between the Chinese Communist Party and the Chinese Nationalist Party (KMT) over the weekend.

At the forum, Chinese President Hu Jintao (胡錦濤) told former KMT chairman Lien Chan (連戰) that both sides of the Taiwan Strait should conduct dialogue and negotiations.

Foreign investor interest provided additional support for a market which has generally lagged its peers in the region, dealers said.

The weighted index closed up 47.55 points at 7,000.09, off a low of 6,950.58 and a high of 7,015.91, on turnover of NT$126.37 billion (US$3.90 billion). This was the highest finish since March 4, 2004 when the index closed at 7,034.10 points.

The paper sector was up 6.72 percent, food added 4.95 percent and textiles 4.47 percent, with tourism rising 2.82 percent as investors took the Chinese lead to buy in.

In comparison, the key electronics sector slipped 0.12 percent.

"The improved cross-strait economic ties apparently gave the broad market a boost," said Frank Lin, senior vice president with Fubon Securities (富邦證券).

"While there was some profit-taking, foreign investor interest still supported the bourse," he said.

He said tourism-related stocks extended their rally but did not gain as much as some other old-economy stocks, due to investors locking in profits.

"Such cross-strait factors had been priced into tourism-related stocks previously; now investors are focusing on the Taiwan government's response and the detailed rules for implementation," Lin said.

The market will also monitor further cross-strait moves, including whether any progress is made in other major issues such as direct transport links across the Strait.
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