Speculation that the recall motion against President Chen Shui-bian (陳水扁) would be postponed following a number of fatalities resulting from the crash of an airliner and a typhoon gave stocks a boost yesterday.
The TAIEX yesterday ended up 201 points, or 3.7 percent, closing at 5,625 on turnover worth NT$79.9 billion.
Analysts said this was a technical rebound after five days of decline, with the market likely to consolidate at around 5,500 and poised to react to further developments on the recall motion.
Another major factor that contributed to the rise was a report that Morgan Stanley may raise the weighting of Taiwan stocks in its indexes later this month. The move is expected to prompt foreign investors to increase their holdings in Taiwan shares.
Foreign investors bought a net of NT$2.72 billion yesterday, according to the Taiwan Stock Exchange. In the last 10 trading days, foreign investors have bought back more than NT$20 billion in local shares, mostly in electronics issues such as Taiwan Semiconductor Manufacturing Co (台積電) and United Microelectronics Co (聯電).
Although the National Stabilization Fund (
Yesterday was the first working day for Vice Minister of Finance Lin Tzong-yeong (
The crash of a Singapore Airlines passenger jet, coupled with an approaching typhoon and flooding, distracted investor attention away from the recall issue against President Chen. KMT legislators are unlikely to propose the recall motion today.
However, KMT legislators plan to enact related regulations concerning the recall of the president and vice president today. If the move wins majority support in the Legislative Yuan, KMT legislators are likely to propose the recall motion sometime next week.
"If the recall motion against the president passes in the Legislative Yuan, the TAIEX is likely to drop to 4,000 before the next president is elected," said Dicky Dai (
"If the recall motion fails, the TAIEX is likely to rebound. But the high point of the rebound is not likely to pass 6,500 before year's end. "Before the recall motion is settled, the TAIEX would have difficulty rising above 6,000," Dai said.
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