Taiwan stocks buck world trend amid Ma victory

Stock investors turned bullish yesterday with Taiwan share prices closed up one percent higher after opposition presidential candidate Ma Ying-jeou was cleared of corruption charges, to remove a major political uncertainty.

The weighted share price index held stable and remained little changed after opening when the market held its breath to wait for the verdict on the trial of Ma's alleged embezzlement of public fund.

The figure shot up by more than 140 points around 10 a.m. immediately after the Taiwan High Court exonerated Ma of corruption charges, upholding the ruling on Ma's innocence by a district court in August.

The local bourse was able to defy the big drops in the three benchmark indexes on Wall Street and the general declines in most Asian markets over the disappointing increase in orders for durable goods and a surge in the number of applications for unemployment benefits in the U.S. and concern over the assassination of Pakistani opposition leader Benazir Bhutto.

The weighted price Index of the Taiwan Stock Exchange gained 83.23 points, or 1 percent, to close at 8,396.95 - its highest level since Dec. 12 - on turnover of NT$114.74 billion.

Gainers led losers 1,335 to 634, with 463 stocks unchanged. A total of 42 stocks closed limit-up and 45 limit-down.

Construction and tourism companies led the way, with the sub-indexes for the two sectors gaining 5.3 percent and 4.7 percent respectively.

Food sector also chalked up 3.43 percent while the heavily weighted financial and electronics sectors were up 1.04 percent and 0.92 percent each.

Securities analysts said the verdict of innocence for Ma is a great relief for investors, although the market is still in a technical rebound after recent heavy losses caused by the domestic political wrangling created by President Chen Shui-bian to push for Taiwan's U.N. membership in the name of Taiwan, successive steps to discredit two of his predecessors, and the bickering over vote-casting arrangement for forthcoming elections.

Ma's verdict has at least started to encourage more buying from investors, they said.

He has vowed to give top priority to reinvigorate Taiwan's economy, a different approach from the seemingly endless ideological rancors held by Chen and his ruling Democratic Progressive Party.

Ma also favors reconciliation and expanded commercial ties with China, and is supported by a growing number of voters and influential businesspeople.

He still maintains a sizable lead of 23% over the ruling party's candidate, Frank Hsieh, in spite of the alleged series of dirty tricks now being used by the DPP.

Analysts said the surge in share prices yesterday was limited mainly by profit-taking after a steep jump of 157 points, or almost two percent, one day ahead of the new court ruling.

Some investors, who celebrated Ma's victory in the court, said that the share price index could have gone much higher if the huge investment funds controlled by the government did not sell their holdings to cool down the excitement on the market triggered by Ma's victory in the legal case.

Analysts said the steep gains of shares in construction and tourism, especially Farglory Land Development Co. and Formosa International Hotels Corp., explained the optimism that Ma will be able to take actions to bolster the consumer confidence, prop up the domestic economy, and quickly break the bottlenecks to bring a massive number of tourists from China.
Foreign institutions were also elated with the removal of a big political concern after Ma was acquitted and can stay in the presidential race.

They continued to be among the major net buyers of Taiwan stocks in the most recent trading sessions.

Looking ahead, analysts said, investors in Taiwan stock market should keep aware of some other major non-economic factors that may have impact on the financial market.

The major political developments will include President Chen's New Year's message on Jan. 1.

People should not rule out the possibility of expecting the unexpected when Chen is giving his last message in the office, considering his increasing clinging to the more politically radical factions in his camp.

Other prominent events will include whether the new legislative election on Jan. 12 can be carried out smoothly and peaceful as well as the outcome of the crucial poll.

The next critical political events will be the presidential election on March 22 and the inauguration of a new national leader on May. 20.