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China optimism helps shares weather market woes

High anticipation of closer economic ties between China and Taiwan has allowed Taiwanese share prices to remain unshaken by last Friday’s huge setback in the US stock market, with the local bourse dropping just 16.90 points, or 0.18 percent, even as other Asian stock markets suffered a blow from the 256-point drop in the US market, a Taipei-based analyst said.

The Chinese Nationalist Party’s (KMT) win in the March 22 presidential election has given local investors and industries the expectation of prosperous economic relation across the Taiwan Strait. The anticipation was further enhanced by the recent Boao Forum in China.

Compared with other major Asian stock markets such as Japan and Hong Kong, which dropped 3.10 percent and 3.47 percent respectively yesterday, analysts said the fruitful results of the Boao Forum have made Taiwanese stocks immune from outside influence, especially in such sectors as tourism, shipping and aviation, construction and finance. These sectors rose by 5.38 percent, 1.46 percent, 4.07 percent and 0.51 percent.

Analysts said the potential boost in domestic consumer confidence was the main factor strengthening those sectors.

“With [the expectation of] more prosperous economic exchanges between Taiwan and China, domestic demand is likely to rise,” said Andy Chang (張雍川), senior vice-president at Cathay Securities Investment Trust Co (國泰投信).

Chang said the revival of business activities could lift the confidence of both consumers and investors.

The promising outlook for cross-strait trade could attract customers as well as lure back the capital that has been flowing out of the country, which is estimated at NT$6.7 trillion over the last eight years, he said.

“The return of foreign-based Taiwanese, along with [an influx of] Chinese tourists and investors, could spur local industry sectors including airlines, real estate and construction, as well as retail commodities,” he said, referring to the 1 million China-based Taiwanese businesspeople.
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