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Taiwan shares soar 5.6 pct on improved China ties

Taiwan shares soar 5.6 pct on improved China ties

Taiwanese stocks surged Monday amid hopes that closer business ties with rival China could stimulate the sputtering economy. Sentiment was also boosted by easing fears of the swine flu epidemic.
The benchmark index rose 337.83 points, or 5.6 percent, to 6,330.4, building on strong gains last week, when the island's government decided to allow mainland institutional investors to invest in the Taiwan stock market for the first time.
On Thursday, the index surged 6.7 percent, its biggest one-day gain in nearly 18 years. The market was closed Friday for a holiday.
Investors applauded the signing of a financial cooperation agreement last week with China that will pave the way for banks in Taiwan and China to set up branches in each other's territory.
Taiwan has long banned Chinese investments, fearing they would allow Beijing to gain control of its economy. But President Ma Ying-jeou has pushed aggressively for closer economic ties since he took office last May, stressing they are crucial for Taiwan's continued economic integration in the region.
Starting this week, mainland institutional investors will be able to apply to invest in the Taiwan market as long as the accumulated stock does not exceed 10 percent of a listed firm's total share value. The buying could take place following the signing of a financial memorandum of understanding expected for June, officials say.
Individuals, however, will still be barred.
"It would take some time before the Chinese investment could have any substantial effect on the economy, but the market has reflected way ahead," said Alex Huang, an analyst with Mega Securities. "Foreign investors rushed to buy back stock they had oversold earlier."
Monday's gains were led by financial and electronics. Cathay Financial Holdings rose 6.9 percent, close to the 7 percent daily limit. Chip giant Taiwan Semiconductor Manufacturing Corp. also gained 6.9 percent.


Updated : 2021-04-22 08:09 GMT+08:00