TAIEX breaks 7,000 mark

Stocks finally broke the 7,000-point barrier to close at their highest level in three-and-a-half-years yesterday, climbing on hopes of an improving economic situation no matter who wins the March 20 presidential election, analysts said.

The TAIEX surged 101.93 points, or 1.47 percent, to 7,034.10, led by gains in financial, electronics and flat-panel stocks as well as domestic-demand related shares such as the raw materials sector.

Shares of Formosa Petrochemical Corp wowed the local bourse by sprinting NT$3, or 5.5 percent, to NT$57.5. Nan Ya Plastics Corp, the nation's biggest maker of plastics, also gained NT$1.5, or 3.3 percent, to NT$47.5.

Flat panel display maker Chunghwa Picture Tubes Ltd added 2.7 percent to NT$22.7, Quanta Display Inc rose 2.9 percent to NT$25 and AU Optronics Corp edged 0.8 percent higher to NT$60.

The turnover yesterday was NT$226.55 billion, a slight decrease from NT$239.9 billion the previous day. Foreign investors yesterday pumped NT$10.8 billion into local bourses, compared to a record NT$19.4 billion on Tuesday, according to the Taiwan Stock Exchange Corp.

Jones Wang (王源錦), deputy manager of ABN-AMRO Asset Management Taiwan, said chances are high that the market will continue its upward swing until the presidential election.

As the TAIEX has rocketed up by 1,144 points, or 20 percent, since trading started on Jan. 27 after the Lunar New Year holidays, some investors are worried that the market may be overheating.

But Wang said the market's recent rise is in line with his expectations, adding that the turnover -- which has consecutively hit above NT$200 billion for the last four days -- was not a concern.

"We should begin to worry [about possible overheating] if the turnover hits NT$260 billion," he said.

Another analyst believes the red-hot market will continue for at least two or three years.

"I believe the TAIEX will roar at full thrust to 10,000 points in the next two years," said Lu Tsung-yao (呂宗耀), former investment director for the Ta Chong Finance Group, at a press conference yesterday.

"I didn't see any factors that will reverse the rising curve of the TAIEX," he said.

Like many market experts, Lu said that the coming presidential election will only depress the market for a short period. The biggest concern hinges on whther or not US Federal Reserve Chairman Alan Greenspan decides to raise US interest rates, he said.

Aside from interest-rate concerns, Lu said there will be a large-scale circulation of funds as the US dollar continues to depreciate against the euro, Chinese yuan and Japanese yen, which will help induce more foreign cash into the market.

Hsieh Chin-ho (謝金河), executive director of the Chinese-language monthly Wealth Magazine, echoed Lu's optimistic views but suggested investors be cautious about picking their stocks.

China Steel Corp yesterday lost 0.3 percent to close at NT$34.7 on a disappointing earnings report for last month.