Shares of THSRC stage recovery

Shares of the nation's first high-speed railway operator Taiwan High Speed Rail Corp (THSRC, 台灣高鐵) and construction firms with property development projects new railway stations rallied as they may benefit from rising property prices after the service comes into operation.

On Sunday night the government said that it planned to give the go-ahead to THSRC this week to operate the NT$500-billion (US$15.33 billion) bullet train system after a delay of more than a year.

THSRC expects to begin test runs next Monday at the earliest.

THSRC shares jumped 5.4 percent to NT$11.88 on the grey market yesterday.

Stock prices of construction firms, which planned to build commercial buildings, or housing apartments near the railway, such as Radium Life Tech Co (日勝生活科技), advanced at an even faster pace.

"Investors rekindled their hopes of benefiting from the price hikes brought by the long-awaited operation of the high-speed railway," said Henry Miao (苗台生), an analyst at Hua Nan Securities Investment Management Co (華南永昌投顧).

The launch of the high-speed train service would prompt prices for property in the nearby areas to rise by approximately 20 percent to 30 percent from their current prices, according to a survey released by local housing agency Evertrust Rehouse (永慶房屋) yesterday.

Shares of Radium Life Tech and King's Town Construction Co (京城建設) jumped by almost 7 percent and 3.34 percent to NT$49.55 and NT$33.95, respectively, outperforming the main TAIEX index's 0.07 percent loss yesterday.

Radium Life Tech and King's Town Construction plan to build housing complexes near the high-speed railway's Taipei and Kaohsiung stations, respectively.

"We expect that prices for properties in the vicinity of high-speed railway stations will regain momentum after the service begins operating," Evertrust Rehouse president Benson Liao (廖本勝) said in the report.

"We are bullish about the property market in the medium and long term," he said.

The stock price of THSRC's biggest shareholder Continental Engineering Corp (大陸工程) also inched up 0.17 percent to NT$29.29 on the Taiwan Stock Exchange, as the construction company owns the right to develop some pieces of property in central Taiwan, where bullet trains will stop.

Stock prices of THSRC's major shareholders such as local TV maker Teco Electric and Machinery Co (東元電機) also rose on the government's planned approval. Teco shares increased 2.7 percent to NT$17.

THSRC said that it lost NT$1.21 billion, or NT$0.59 per share, in the first six months of the year.

So far, the company has borrowed in excess of NT$400 billion from banks to finance the construction of the high-speed railway.