Taiwan markets cheer Ma's victory

TAIEX (^TWII) closes 4% higher on pro-China candidate's presidential win.
EWT

TAIPEI (Dow Jones)--Investors pushed Taiwan's share market and currency sharply higher Monday on hopes President-elect Ma Ying-jeou will boost the economy by improving ties with China, though some are skeptical of instant results. Despite optimism in the market over improved relations with China, "the reality is these changes may take longer than most have expected and would be just as delicate and challenging even for a Kuomintang-led administration," said Standard Chartered Bank economist Tony Phoo.
The New Taiwan dollar ended Monday at NT$30.229 to the U.S. dollar - a more than 10-year high close - with the currency market notching up record volume of US$5.0 billion. Traders reported heavy central bank intervention to support the U.S. dollar, which had closed Friday at NT$30.55.
The benchmark share index ended 4% higher at 8,865.35 in heavy volume, though off an early peak of 9,049.23. Some analysts remained upbeat on the outlook for the share market. "Too many investors have been waiting to buy Taiwan shares after the election," said Citigroup analysts. "Given the heavy outflows of last year in particular, it is likely there would be only a very mild pullback, if any, after the initial rally given the degree of pent-up demand," they added.
Still, while the Taiex may continue to gain Tuesday, "the rise won't be as big as it was today," said Mega Securities trader Alex Huang. "The market may be more rational after two days of passionate rallies" and take its main cue from whatever Wall Street does later Monday. Citigroup economist Cheng Cheng-mount said the ball was now in China's court in terms of cross-strait ties. "Ma's victory demonstrates Taiwan's goodwill to China but now we'll have to see what China does - if it continues to hold rigidly to its one-China policy" there could be some disappointment.
Although electronics shares, which account for more than half of the Taiex's value, rose 3% Monday, KGI Securities trader Raymond Chen said they might soon fall because companies are expected to report lackluster earnings in April.
Tourism companies were Monday's top performers, with their subindex up 6.8% on hopes Ma might deliver on his promise to triple the number of Chinese visitors to Taiwan to 3,000 per day from the current quota of 1,000 per day. He hasn't given a timeframe for this goal. Ambassador Hotel (2704.TW) ended 7% higher at NT$55.10 and Formosa International Hotels Corp. (2707.TW) rose 6.8% to NT$518.00. Andrew Teng, a stock trader at Taiwan International Securities, predicted the Taiex could test the 9,300 level later this week. "The strong momentum will continue through the week as foreign investors are likely to invest more in local shares," he said.
-By Jessie Ho, Wei Yi Lim, Joy C. Shaw and Alex Pevzner,
Dow Jones Newswires March 24, 2008 04:55 ET (08:55 GMT) Copyright (c) 2008 Dow Jones & Company, Inc