Tourism-related stocks saw significant gains yesterday, boosted by the government's announcement it would accelerate the timeframe for the opening up to Chinese tourists and other cross-strait liberalization moves.
The tourism sector closed up by 6.92 percent, the highest among all industries, with stocks including Phoenix Tours International Inc (鳳凰旅行社), Formosa International Hotels Corp (晶華酒店) and the Ambassador Hotel Ltd (國賓飯店) rising by the 7-percent daily limit to close at NT$59.4, NT$87.5, and NT$35.7, respectively.
The benchmark TAIEX rose 86.8 points, or 1.27 percent, to 6,959.64 yesterday. For the week, the index closed up 1.2 percent. Turnover was NT$95.18 billion (US$2.97 billion), according to the Taiwan Stock Exchange.
"Tourism, transportation and asset stocks still have room to grow as long as cross-strait policies move toward relaxation," Alan Tseng (曾炎裕), a vice president at Capital Securities Corp (群益證券), said in a phone interview.
During a luncheon of China-bound Taiwanese businesspeople on Thursday, Premier Su Tseng-chang (蘇貞昌) announced the government would prioritize liberalization of cross-strait exchanges, including speeding up policy action on cross-strait charter flights and opening up to Chinese visitors.
The announcement lifted the market, especially after President Chen Shui-bian (陳水扁) agreed on late Wednesday to relinquish some powers to the premier.
During Thursday's lunch, Joseph Wu (吳釗燮), chairman of the Mainland Affairs Council, said the government would complete negotiations with the Chinese authorities within four to five months on regularizing direct charter flights and the two sides had solved some issues regarding Chinese tourists visiting Taiwan via unofficial channels.
The remarks by both Su and Wu have sparked market speculation that the government may increase the number of Chinese tourists allowed to visit Taiwan to 1,500 per day from the current 1,000 quota by October.
The Cabinet did not confirm the speculation, but Tseng said the market had already taken into account future scenarios in current performance.
The transportation sector, for instance, set to benefit by the potential huge demand, was up by 3.13 percent. Shares of China Airlines Ltd (中華航空), the nation's largest carrier, rose 5.4 percent to NT$15.60, while rival EVA Airways Corp (長榮航空) surged 6.7 percent to NT$14.25.
Investors, however, still needed to be cautious about stock manipulation amid the hype, which usually occurs with small stocks that are largely held by a small number of shareholders, Tseng warned.
In contrast to all the market excitement, travel agents were cool on the issue.
"The government has been talking of opening up to Chinese visitors since last year, but nothing has materialized so far," said James Lin (林益全), a manager at Golden Travel Service Co (金華旅行社).
Many local travel agencies have prepared for the opening and have applied for business licenses from the Tourism Bureau, but the government's vacillating on the policy has only increased their doubts rather than given them confidence, Lin said.
Before the opening, there were still supporting measures to be worked out regarding the arrival of tourists from a country such as China, Lin said.
The government tends to cancel the right of travel agencies to accept Chinese tours if a certain number of tourists escape from the group and stay illegally in Taiwan.
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