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Post-poll stock rally may be shortlived: analysts

Trading on the nation's stock market is expected to rise in the immediate post-election period, but a bull market may be short-lived as any move by the ruling party toward changing cross-strait policy won't come as quickly as expected, analysts said yesterday.

"The local bourse will go up on `celebration buying' for a few days, with only a small-scale upswing in the benchmark index," Jesse Wang (王嘉樞), head of research at BNP Paribas Securities (Taiwan) Co, said yesterday.

The TAIEX rose 0.8 percent to 6,228.95, a three-and-a-half month high, on Friday.

The market was overly bullish on expectations of a sudden change in the government's cross-strait policy prior to Saturday's polls, but a change is not expected so soon after the election, Wang said.

Wang, who was last month honored as one of Taiwan's three top analysts by the monthly magazine Asiamoney, said that a quick relaxation of the policy on trade with China would be risky for the Democratic Progressive Party (DPP), as it would jeopardize its identity and differentiation from rival parties. The party's move to alter its power structure after the defeat would also delay the pace of opening up trade with China, he said.

President Chen Shui-bian (陳水扁) said in a televised interview last Thursday that it was necessary to overhaul the "active opening, effective management" policy on China-bound investments at the upcoming Economic Development Advisory Conference. The remarks, however, came just a few days after he told supporters that a pan-blue victory in the past weekend's elections would lead to a tightening of policy.

The DPP's worse-than-expected showing in the polls has sparked speculation that the party may expedite loosening restrictions on economic and trade activities across the Taiwan Strait.

"Small steps in relaxation are likely" in several areas, such as allowing more Chinese tourists to visit Taiwan, continuing direct cross-strait charter flights and lifting restrictions on investing in 0.18-micron wafer-making technology in China, Wang said.

However, foreign investors' weighting of the local market will not increase significantly unless exciting, full-scale liberalization takes place, he said.

Kung Ming-hsin (龔明鑫), a department director at the Taiwan Institute of Economic Research, anticipated that the government would inevitably move toward further opening up cross-strait policy, as it was necessary for Chen to make certain breakthroughs in his eight-year presidency.
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