Farglory Land Development Co (遠雄建設) yesterday saw its share prices soar limit-up after the stock was added to the Morgan Stanley Capital International (MSCI) Barra’s Taiwan Index category, reversing a two-day drop.
The inclusion is expected to take effect after the stock market closes on May 30, the index compiler said in a statement on Tuesday. In its latest index review, MSCI Barra also included steel wire maker Feng Hsin Iron & Steel Co (豐興鋼鐵) and Taiwan Business Bank (臺灣企銀), a state-run lender focusing on domestic small to medium-sized enterprises, in its Taiwanese index.
Farglory, which made its debut on Aug. 6 last year, has seen its shares rally 50.85 percent amid bullish sentiment toward the nation’s property market. The stock closed at NT$106.5 (US$3.49) yesterday on the Taiwan Stock Exchange after plunging 18 percent between April 16 and April 30.
Led by Farglory, the sub-index of construction shares underwent a technical rebound and rose an average 4.06 percent following a decline of nearly 20 percent over the past three weeks, SinoPac Securities Corp (永豐金證券) analyst Jesse Knutson said in a note to investors yesterday. That compared with a rise of merely 0.78 percent on the benchmark TAIEX index.
Before the recent weak performance, construction shares had surged on hopes of closer economic ties with China after the March 22 presidential election, continued foreign capital inflow to the real estate market and president-elect Ma Ying-jeou’s (馬英九) campaign promises to spend NT$3.99 trillion (US$130.7 billion) on 12 projects in Taiwan after taking office on May 20, the analyst said.
Separately, land prices in Taipei City will see little room for improvement except for luxury home projects, a real estate appraiser said yesterday.
“In the past, prices of small plots of land in the city have gone up by 10 percent, which seriously squeezed the profit margin of developers and construction companies,” Charlie Yang (楊長達), director of real estate appraisal for DTZ (戴德梁行), told a media briefing yesterday.
The recent hike in home prices would suppress the willingness of developers to compete for higher priced land in spite of a lack of supply in Taipei, he said. But high-income buyers may continue shopping for plots measuring a minimum of 300 ping (990m²) for luxury home projects, he added.
The government’s urban renewal plan is expected to offer incentives for owners of older homes to sell their land for new housing projects, which will relax tight supply, Yang said.
Owners in areas such as Zhongshan (中山), Zhongzheng (中正) and Da-an (大安) districts will be able to negotiate a 30 percent premium if they collectively agree to release a large plot of land, he said.