The stock market gained 1.36 percent yesterday, surging past the 6,500 mark as protests against government policies proceeded peacefully, analysts said.
The benchmark TAIEX rallied 88.72 points to 6577.81 at the close of trading on turnover of NT$166.467 billion (US$5.05 billion) after China reiterated on Sunday that it would promote investment in Taiwan and encourage Chinese to visit the country.
The announcement helped defuse concern that the Democratic Progressive Party demonstration could have a negative impact on the local bourse, said Winson Wang (王榮旭), an analyst at Marbo Securities Consultant Co (萬寶證券投顧).
“Investors appeared unaffected by the protest, which has been conducted in a peaceful manner and is expected to end later today [Monday],” Wang said by telephone.
The weighted index opened high at 6,516.13 points and climbed slowly to close at its highest point.
It once dropped to 6,457.14 during the trading session, Taiwan Stock Exchange Corp (TWSE) data showed.
Construction shares picked up the most at 4.3 percent, followed by cement stocks at 4.2 percent and paper and pulp issues at 2.8 percent.
Wang attributed their advance to expectations of increasing cross-strait trade.
Foreign fund managers, however, continued to offload local shares, selling a net NT$2.39 billion in stocks, TWSE tallies showed.
As of the close on Friday, stocks owned by foreign institutional investors amounted to NT$4.87 trillion, or 29.92 percent of the entire equity market. Foreign institutional investors dumped NT$36.15 billion in shares last week.
Wang linked the adjustment to the fall on Wall Street, saying the TAIEX was likely to fluctuate between 6,300 points and 6,600 points before the Dragon Boat Festival on May 28.
“Investors seeking short-term profit may opt to adjust their portfolio, thereby pushing up selling pressure,” Wang said.
Johnny Chen (陳擎宏), deputy manager of the economics and industry research department at First Commercial Bank (第一銀行), said easier monetary policy and tax reforms had contributed to the bullish sentiment.
Chen said a series of interest rate cuts had helped channel bank savings to the equity market now that the financial storm appeared to have stabilized. Capital flight had also slowed since the inheritance tax was cut late last year, Chen said.
RSS