With overnight Wall Street gains and expectations that some manufacturing sectors will benefit from post-quake reconstruction in China, share prices rose 1.81 percent to 8,989.53 points yesterday.
Taipei’s stock market outperformed regional markets such as Japan (up 1.53 percent), South Korea (up 1.05 percent) and Hong Kong (up 0.69 percent).
Turnover reached NT$138.456 billion (US$4.50 billion), up from NT$106.763 billion the previous day, the TAIEX tallies showed.
“Cement, food, petrochemicals and steel [sectors] advanced as they were seen to benefit from the Sichuan earthquake,” SinoPac Securities Corp (永豐金證券) analyst George Hung said in a client note yesterday.
The cement sector rose 4.83 percent, the food sector was up 1.97 percent, steel rose 1.88 percent, and the plastics/petrochemical sector rose 1.50 percent, the stock exchange’s data showed.
Asia Cement Corp (亞洲水泥) rose 6.96 percent, or limit-up, to NT$55.30 after the company said in a stock exchange filing that its Sichuan unit will resume operations in a day or two. The company didn’t reveal estimates of possible financial losses from the quake.
“Asia Cement is expected to be the main beneficiary since it already has a plant in Sichuan and has said its wholly owned Sichuan Ya Dong Corp (四川亞東) will resume production in a day or two after inspecting its production facilities,” Hung wrote in the note.
The last two days of trading presented quite a turnaround for Asia Cement. The stock declined 6.67 percent on Monday on reports that its China unit’s initial public offering (IPO) was priced near the low end of its indicated price range.
Hung said other cement producers are also likely to benefit from reconstruction, with Taiwan Cement Corp (台灣水泥) remaining his top cement pick with a target price of NT$67.
At the close of Taipei trading, Taiwan Cement rose 3.27 percent to NT$50.50, Chia Hsin Cement Corp (嘉新水泥) gained 4.03 percent to NT$30.95 and Universal Cement Corp (環球水泥) surged 4.27 percent to NT$21.95.
For shares in the steel and food sectors, SinoPac’s picks include Uni-President Enterprise Co (統一企業) and China Steel Corp (中鋼).
“We believe Uni-President will see bursting food demand in the wake of the earthquake, and China Steel will find it easer to transfer higher costs as steel demand and prices are sure to rise in the wake of the quake,” the note said.
It gave a target price of NT$57.3 for Uni-President, which closed 2.35 percent higher at NT$43.5 yesterday. He also recommended a target price of NT$59 for China Steel compared with its closing price of NT$50.80 yesterday.
But Far Eastern Department Store (遠東百貨) may be the biggest laggard stock with regard to the Sichuan disaster, as the retailer is expected to suffer from depressed consumer sentiment there, he said.
The stock declined 2.26 percent to NT$45.40 yesterday.