TAIEX closes at six-year high on interest rate raise


Sat, Dec 30, 2006 - Page 12

Shares closed up 1.17 percent at a more than six-year high yesterday on continued year-end window-dressing activity and a stronger New Taiwan dollar, dealers said.

Following the central bank's decision on Thursday to raise interest rates, the New Taiwan dollar traded up against its US counterpart.

Analysts also attributed Taiwan's strength to the Hong Kong blue chip Hang Seng Index reaching 20,001.91 on Thursday -- the first time the index has risen above the 20,000 level.

The TAIEX closed up 90.79 points at 7,823.72 on turnover of NT$102.95 billion (US$3.16 billion).

For the week to yesterday, the weighted index closed up 171.25 points or 2.24 percent, following a 1.51 percent gain in the previous week.

Average daily turnover stood at NT$96.86 billion, compared with NT$104.78 billion.

Winning streak

The bourse closed up 1,275.38 points or 19.5 percent for this year, rounding off the longest winning yearly streak on the exchange since 1989.

Dealers said that prospects of an upswing in interest rates are painting a rosy picture for the local currency and heightened hopes for more foreign capital inflows.

Amid such hopes, investors extended their window-dressing activity into the last session of the year, they said.

"The Hang Seng breaking above 20,000 points boosts Taiwan's China plays," said Li Fang-kuo, head of industry research at SinoPac Holdings (永豐金控), referring to firms that benefit from demand in China.

Hong Kong bonus

Taiwanese companies with units listed in Hong Kong were among the best performers.

Wei-Chuan Foods (味全) increased 6.9 percent to NT$23.15, while footwear maker Pou Chen (寶成) gained 4.4 percent at NT$37.

Shares are expected to extend gains next week as investors continue to see local stocks as relatively undervalued compared with their regional peers, dealers said.

However, profit-taking may emerge as the market approaches a key resistance level at around 7,900 points, they said.