The TAIEX had its biggest gain in five weeks yesterday after President Chen Shui-bian (陳水扁) appointed Yu Shyi-kun as the new premier. Yu is expected to put the economy on the top of his agenda.
The TAIEX surged 275.25 points, or 5 percent, to close at 5,798.05 points, its single-largest rise since Dec. 12. Within the index, 474 stocks rose and 50 fell. Trading value was NT$132.4 billion, marginally down from Friday's NT$133.7 billion.
Pundits say the new Cabinet appointments may bode well for the markets.
"Investors have been very optimistic about the new Cabinet. Buying was very strong throughout trading," said Jacky Tam, an analyst with Yuanta Core Pacific Capital Management in Taipei.
Tam said he expects the optimistic sentiment will continue to send the index higher.
"From a technical-analysis perspective, the market has regained momentum after its recent consolidation. The upside will continue for one or two sessions before profit-taking sets in," Tam said.
"The new Cabinet gave investors new hopes," said Yophy Huang (黃耀輝), an associate research fellow at Chung-hwa Institution for Economic Research. "The performance of the new Cabinet will directly affect the performance of the stock market in the coming months."
Expectations of better cooperation within the Cabinet was the main factor for the stock market's rise, another market analyst said.
"Sentiment was mainly bolstered as investors anticipated more harmony within the new Cabinet in which members were mostly hand-picked by [the president] himself," said Bentham Hung, a fund manager at Fuh-Hwa Securities Investment and Trust (
"Chen is expected to gain greater control now over policy making and execution, weeding out some of the different voices from within his own political party under the old Cabinet," Hung said. "The main problem with the [old] Cabinet has been that when certain policy conflicts occurred, some Cabinet members would bypass the premier and report to President Chen directly. The consequences of that were indecisive economic and financial policy making."
Also, "government buying might have also played a role in [yesterday's] rally to create positive sentiment in the market," Hung said.
He expects the market to continue its current upturn in the next few days and breach the 6,000-point level if Wall Street stays firm.
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