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TAIEX gains on high expectations of Fed rates cut

Taiwan share prices closed 1.21 percent higher yesterday, tracking Wall Street's rebound, amid expectations the US Federal Reserve will cut interest rates this week, dealers said.

The weighted index closed up 90.63 points at 7,576.42, off a high of 7,603.38 and a low of 7,447.44, on turnover of NT$95.95 billion (US$2.97 billion).

Risers led decliners 988 to 906, with 435 stocks unchanged. A total of 11 stocks closed limit-up, while 50 were limit-down.

Financials were up 3.85 percent, while electronics gained 1.85 percent. Construction lost 3.17 percent, while petrochemicals fell 2.44 percent and cement lost 1.95 percent.

Financials rose on expectations that Taiwan will soon make it easier for local banks to invest in China, dealers said.

Tu Jin-lung (杜金龍), chairman of Grand Cathay Investment Services Corp (大華投信), said that strength in large-cap financials and key technology stocks outweighed weakness in companies with major China operations.

He said: "While it is yet to be seen when the government will give the green light, the financials still scored significant gains thanks to increasing hopes for an easing on China-bound investments."

Tu said technology stocks rose in line with their US counterparts on optimism that a US government economic stimulus package will increase demand for technology exports.

Taiwan firms with large operations in China extended declines on lingering fears of disruption from severe weather.

The market will be shut from Monday for the Lunar New Year break. Trading will resume on Feb. 12.
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