Local bourse finishes up as regulators discuss cross-Strait currency exchange
CNATAIPEI -- Shares in Taiwan extended gains yesterday from a session earlier, with buying rotating to the financial sector after financial regulators from Taiwan and China hammered out new investment measures to strengthen cross Taiwan Strait exchanges in the securities sector, dealers said.
January 31, 2013, 11:11 am TWN
Securities companies, in particular, were in the spotlight as investors had high hopes that liberalization planned by China to allow Taiwanese securities to set up joint ventures there will give a boost to their profitability, the dealers said.
The weighted index closed up 30.98 points, or 0.39 percent, at 7,832.98, after moving between 7,804.71 and 7,847.21 on turnover of NT$80.59 billion.
The market opened up 0.40 percent and moved to the day's high as the financial sector attracted buying on the back of the new investment measures, but profit taking followed to cap the gains by the end of the session, the dealers said.
As securities stocks were spotlighted, buying in the benchmark electronics sector faded to some extent, so that the broader market failed to jump over the technical hurdles ahead of 7,850 points, they said.
“The local bourse was basically driven by rotational buying as interest shifted to the financial sector from the high-tech sector today,” Mega International Investment Services Corp. analyst Alex Huang said.
“As the buying has rotated so quickly in recent sessions, it will not be easy for the index to make a significant breakthrough any time soon,” Huang said.
However, Huang said the measures hammered out by Taiwan's Financial Supervisory Commission (FSC) and China's Securities Regulatory Commission served as an important factor in the market's upward movement throughout the session.
Among the measures, China is planning to issue a total of three full-service securities firm licenses to Taiwanese firms to set up joint ventures in Shanghai, Fujian and Shenzhen.
In addition, China could allow Taiwanese securities firms to set up single joint ventures in cities such as Pudong, Chongqing and Quanzhou.
Boosted by the positive leads, Capital Securities gained 6.33 percent to close at NT$11.75, and Yuanta Financial Holding, which holds Yuanta Securities, rose 3.92 percent to end at NT$15.90.
The financial subindex closed up 0.74 percent.
According to the FSC, the new liberalization measures will be included on the agenda of future negotiations under the Economic Cooperation Framework Agreement, which was signed in 2010 to facilitate cross-strait trade and investment.
“These measures are no doubt positive but I am afraid that the implementation will not be immediate and could be years away,” Huang said, referring to the future negotiations and a likely cumbersome application process.
In the electronics sector, which closed up 0.13 percent, Taiwan Semiconductor Manufacturing Co., the world's largest contract chip maker, gained 0.50 percent to end at NT$101.50, while smartphone camera lens supplier Largan Precision Co. fell 1.88 percent to close at NT$782.00, falling from a 7-percent increase seen a session earlier.
“Many investors remained wary of the high-tech sector as the first quarter is a traditional slow season for the business and they tend to pocket gains they have built up,” Huang said.