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Stock market, local currency skyrocket
MA YING-JEOU MAGIC:
Financial and construction stocks performed particularly well, and the NT dollar continued to gain against the greenback on post-election optimism
By Lisa Wang
STAFF REPORTER
Tuesday, Mar 25, 2008, Page 1
The stock market rallied yesterday by nearly 4 percent as investors snatched up financial and construction stocks, which are expected to benefit from president-elect Ma Ying-jeou's (皑璣) plan to allow Chinese to invest in the property market.
The TAIEX rose by 3.99 percent, or 340.36 points, to close at 8,865.35 points after hitting a high of 9,049.23 earlier yesterday. Turnover was NT$270.87 billion (US$8.83 billion), up from Friday's NT$170 billion. Overseas fund managers invested heavily, buying a net NT$57.91 billion of local stocks.
The rally prompted the NT dollar to appreciate NT$0.321 to NT$30.229 against the greenback, with turnover hitting an all-time high of US$5 billion.
"Financial and construction shares are favored by investors because they are expecting Ma's campaign promises to boost [companies in those sectors]. Tech shares are lagging behind," said Andrew Teng (綡膇), an analyst with Taiwan International Securities Corp (供靡ㄩ).
Most financial service providers saw their stock prices increase by percentages approaching the daily limit, led by Cathay Financial Holding Co (瓣北), which advanced 6.96 percent to NT$87.6. Taishin Financial Holding Co Ltd (穝北), the nation's third-largest financial service provider, rose 6.81 percent to NT$15.55.
Financial companies could benefit from improving domestic consumption and recent approval from the government to invest in Chinese banks, Teng said.
Peter Kurz, an analyst with Citi's local branch, said in a report released on Sunday that investors should target laggard banks and asset plays.
"First Commercial Bank (材蝗︽), Chinatrust (い獺北) and Cathay Financial are good laggards to target," Kurz said.
However, Teng said investors should be cautious about buying financial shares. He cited mounting risk, limited upside and imminent profit-taking and added that the recent rally in financial shares had started several trading days before the election.
Construction shares were also some of the biggest winners yesterday, with leading stocks approaching the 7 percent daily limit. Shining Building Business Co Ltd (秏狶砞) and Farglory Land Development Co Ltd (环动砞) advanced 6.96 percent and 6.78 percent to NT$95.3 and NT$104 respectively.
Ma's plan to allow Chinese to invest in the property market could see prices for upscale housing increase by 20 percent and those for commercial offices surge by 30 percent by the end of the year, said Victor Chang (眎猋チ), an executive at US-based real estate agency Electronics Realty Associates Inc.
Kurz said many investors had held off until after the election, despite clear signs of a Ma victory.
"We see initial upside to 9,500 and maintain our 12,000 year-end target," he said.
Financial, airline and construction industries would be the biggest beneficiaries of Ma's policies, he said.
Eva Airways Corp (篴), the nation's second-largest carrier, surged 6.9 percent to NT$20.85 as a result of Ma's pledge to push for direct flights to China this summer. Evergreen Marine Corp (篴笲), the nation's biggest shipping line, advanced 2.2 percent to NT$30.
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