The New Taiwan dollar and stocks advanced as the Chinese Nationalist Party (KMT) won key local elections on Saturday, prompting speculation that President Ma Ying-jeou (馬英九) will extend pro-China policies that have boosted investment.
The NT dollar rose 0.1 percent to close at NT$30.8 against the greenback according to Taipei Forex Inc. The currency had earlier appreciated by 1.4 percent. The benchmark TAIEX gained 55.02, or 0.7 percent, closing at 8,367.17, its highest level since Nov. 22.
The KMT secured mayorships in three out of five cities, including Taipei.
Securing Taipei was crucial to controlling Taiwan for Ma, who has worked to strengthen commercial ties with China, the world’s fastest-growing major economy and Taiwan’s biggest trading partner and investment destination.
The president and his predecessors, the Democratic Progressive Party’s (DPP) Chen Shui-bian (陳水扁) and Lee Teng-hui (李登輝) of the KMT are all former Taipei mayors.
business with China
“The election results mean cooperation with China will continue,” said Parker Wu, a fund manager at Agriculture Bank of Taiwan (農業金庫), who helps oversee the equivalent of US$98 million.
“There was a lot of concern before the election about the -possibility of the KMT losing badly. With that uncertainty gone, some investors who had held back their funds are entering the market again,” he said.
The KMT also won the mayorships in the soon-to-be special municipalities of Sinbei City and Greater Taichung, while the DPP took the other two soon-to-be special municipalities.
The five municipalities are home to 60 percent of Taiwan’s 23 million people.
Taiwan government bonds were little changed. The yield on the 1.125 percent bond maturing in September 2020 was 1.4 percent, according to the GRETAI, Taiwan’s biggest exchange for bonds.
intervention
The New Taiwan dollar pared most of the day’s gain in the last minutes of trading on speculation that the central bank intervened to check appreciation that could hurt exporters, according to traders who declined to be identified because of the sensitivity of the matter.
upbeat markets
The TAIEX has advanced 2.2 percent this year after surging 78 percent last year as improving relations with China boosted capital inflows.
Shares in Formosa International Hotels Corp (晶華酒店), a local hotel operator, climbed 5 percent to NT$507, the highest level since Oct. 26; Ruentex Industries Ltd (潤泰), which owns a stake in RT-Mart China, the largest hypermarket chain by retail sales in China, rose 1.3 percent to NT$94.70; China Airlines Ltd (中華航空) surged 6.8 percent to NT$24.25, the most since Aug. 2, while EVA Airways Corp (長榮航空) advanced 5 percent to NT$34.50. Both carriers operate direct flights to China.
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