The country's main stock-market index had its biggest rally in seven weeks after the ruling DPP won the legislative election, boosting optimism the government will be able to pass legislation to speed up an economic recovery. Taiwan Semiconductor Manufacturing Co (TSMC, 台灣積體電路公司) led gains.
The TAIEX rose 205.49 points, or 4.6 percent, to 4,646.61, its biggest gain since Oct. 11. Within the index, 491 stocks rose and 34 fell. The total value of trade was NT$91.9 billion (US$2.7 billion), more than three-quarters higher than the six-month daily average of NT$52.6 billion.
"The election results actually give the [DPP] a more solid foundation and certainly a clearer mandate to be able to clear up a number of the outstanding tasks which have been on the legislative plate over the past 18 months," said Spencer White, head of research at Merrill Lynch Taiwan Ltd.
The DPP raised its seats to 87 from 64 in the 225-seat legislature, displacing the KMT as the dominant party and boosting its ability to form a majority.
"Sentiment was bullish as uncertainties about the election results were removed," said President Securities Corp (統一證券) analyst Alex Yeh.
Foreign institutions, already net buyers of nearly US$1.5 billion worth of Taiwan stocks last month, were likely to continue building positions as the nation's political outlook appeared less cloudy after the elections, he said.
"The rally is likely to continue in the next three days, but profit-taking may set in as the index approaches 4,800 to 5,000 points," Yeh said.
But dealers and analysts caution that the political situation remains uncertain, as President Chen Shui-bian (陳水扁) still needs to find a way to work with rival parties that don't seem any more willing to cooperate to form a coalition government than they were before the election.
The technology sector posted the biggest gains. TSMC rose NT$4.50, or 6.2 percent, to NT$77.50. The biggest made-to-order chipmaker predicts first-quarter sales will rise more than 10 percent from the fourth quarter.
United Microelectronics Corp (UMC,
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