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Local markets surge after FSC eases rules

The nation’s equities and foreign exchange markets posted strong performances yesterday on expectations of an influx of foreign capital after the Financial Supervisory Commission (FSC) relaxed restrictions on investments from China, analysts said.

The TAIEX soared 378.51 points, or 6.74 percent, to 5,992.57, while the New Taiwan dollar gained 1.26 percent, or NT$0.425, to NT$33.233 against the US currency.

The anticipated capital influx helped strengthen the NT dollar, a dealer at a local bank said.

The rallies came after the FSC on Wednesday promulgated regulations allowing qualified domestic institutional investors (QDIIs) from China to apply to acquire stakes of up to 10 percent in Taiwanese listed companies or those whose shares trade over the counter.

Winston Wang (王榮旭), an analyst at Marbo Securities Consultant Co (萬寶證券投顧), said the announcement injected a healthy dose of confidence into the local bourse, which had shed more than 260 points since the specter of a swine flu pandemic was raised at the weekend.

Transactions amounted to NT$136.88 billion (US$4.12 billion) yesterday, with 682 stocks closing at the upper daily limit of 7 percent, Taiwan Stock Exchange tallies showed.

The plastic and tourism sub-­indexes gained 6.9 percent yesterday, while financial and construction sub-­indexes rose 6.84 percent and 6.77 percent respectively, the figures show. The TAIEX has risen 5.7 percent this month, making it the best performer in the region.

Wang predicted the bullish sentiment would continue this month, when President Ma Ying-jeou (馬英九) is to celebrate his first anniversary as head of state on May 20.

Alan Tseng (曾炎裕), an analyst at Capital Securities Corp (群益證券), also expected foreign capital to keep pouring into local financial markets on improving cross-strait trade.

Chinese authorities are expected to publish rules today on investments in Taiwan.

Foreign funds bought a net NT$32.99 billion in local shares yesterday. Turnover was NT$3.84 billion on the Taipei Foreign Exchange and NT$623 million on the smaller Cosmos Foreign Exchange, making NT$4.463 billion, the ­second-largest total in history, data from the two companies showed.

“The deregulation by the governments on both sides of the Strait definitely accounted for the celebratory mood,” a dealer said, requesting anonymity.

However, the dealer said the NT dollar’s rise was unlikely to last, as the central bank has displayed a dislike for excessive volatility.

Also See: No QDII investment on local bourse yet
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