The nation's stock market closed higher yesterday as investors cheered former Chinese Nationalist Party (KMT) chairman Ma Ying-jeou's (馬英九) announcement of his intent to run for the presidency in 2008 despite his indictment on corruption charges on Tuesday, market watchers said.
The TAIEX rose 72.62 points, or 0.94 percent, to close at 7,809.45 on turnover of NT$88.4 billion (US$2.7 billion) yesterday, the last trading day before the Lunar New Year holiday.
The rising momentum is expected to continue when the market reopens on Feb. 26 after the nine-day Lunar New Year holiday, analysts said.
Foreign investors bought stocks with a net worth of NT$3.26 billion yesterday, ending net sales amounting to NT$8.89 billion over the past two consecutive days.
"The announcement of Ma's indictment indicated the end of the bearish factors caused by the political uncertainty," said Kevin Li (李文宗), vice president of Shin Kong Investment Trust Co (新光投信).
As investors' confidence strengthens, the equity market is expected to open high and close high when it reopens, providing no big surprises, like terrorist activities, have had a negative impact on international markets during the Lunar New Year holiday, Li added.
IBT Securities Co (
Both Shin Kong Investment and IBT Securities expect the TAIEX to hit 8,100 or 8,200 points in the first quarter before the next consolidation stage kicks in.
Ma stepped down from his post on Tuesday after prosecutors indicted him on corruption charges related to the alleged misuse of NT$11.2 million during his eight years as Taipei mayor.
In an unexpected twist, Ma immediately declared that he would run for the presidential election next year.
Shin Kong suggested that investors adopt a wait and see approach until both major parties' choice of a presidential candidate becomes clear in April or May.
Meanwhile, Goldman Sachs said in a report released yesterday that it was still too early to conclude if the KMT would be able to win the presidency next year.
But the latest political development could pose additional downside risks to their base scenario that economic and political realities would push for more breakthroughs in the liberalization of cross-strait trade in the next few years, Goldman Sachs said.
Merrill Lynch predicted in its latest research note that the Democratic Progressive Party was likely to win the presidency next year, which could lead to a slower pace in the relaxation of cross-strait restrictions and depress the TAIEX to between 7,200 and 7,400.
In general, foreign analysts said the near-term impact on the local bourse would be limited and appeared still optimistic about the market in the next half of the year on high seasonality in the high-tech sector.
Shin Kong Investment raised its forecast that the TAIEX could challenge 9,000 points in the fourth quarter of this year, up from its previous forecast of 8,500 points, Lee said.
For short-term investment picks, IBT Securities prefers high-tech plays, including integrated circuit design houses like MediaTek Inc (
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