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 (
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 (
Most financial service providers saw their stock prices increase by percentages approaching the daily limit, led by Cathay Financial Holding Co (國泰金控), which advanced 6.96 percent to NT$87.6. Taishin Financial Holding Co Ltd (台新金控), 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 (
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 (鄉林建設) and Farglory Land Development Co Ltd (遠雄建設) 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 (張欣民), 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 (
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