TAIEX up 0.97 percent on technical rebound
By Kathryn Chiu, The China Post Wednesday, March 26, 2014, 1:06 am TWN
TAIPEI, Taiwan -- Amid the ongoing demonstration against the Cross-Strait Trade in Services Agreement with China, shares in Taiwan on Tuesday closed up 0.97 percent to 8689.3 points on the buying of foreign institutional investors and government funds.
Shares in Taiwan continued a technical rebound Tuesday led by sectors expected to benefit from the cross-strait pact, even as protests over it continue in the Legislature.
The development reflects market optimism that the pact will nonetheless find its way past both the protesters who have occupied the Legislative Yuan since March 18 and lawmakers themselves, the Central News Agency cited analysts as saying.
The weighted index on the Taiwan Stock Exchange closed up 83.92 points or 0.97 percent at 8,689.3 after moving between 8,589.19 and 8,689.3 on turnover of NT$82.18 billion.
Among the best performers were financial, e-commerce and software companies ready to benefit from the removal of barriers in the service industries on both sides of the Taiwan Strait.
Shares of video game companies Soft-World International Corp. (智冠科技) and Cayenne Entertainment Technology Co. (紅心辣椒娛樂) rose by the daily maximum of 7 percent to close at NT$101 and NT$102.5 respectively.
Cathay Financial Holding Co. (國泰金控), meanwhile, gained NT$0.65 to reach NT$44.3.
Low Valuation Increases the Attractiveness of Taiwan Shares
The United Evening News yesterday cited analysts to report that the relatively low valuation is the reason why Taiwan shares gained traction recently.
Although the current political standoff over a business accord with China hasn't showed signs of mitigation, managers of research departments at foreign brokerages are concerned about the development of the situation but have basically maintained a neutral view on shares in Taiwan.
They said it was too early to predict whether foreign investors will scale back their holdings in Taiwan's market or even completely withdraw their funds from the market.
They also said that a sudden plunge in share prices would present the best opportunity to buy in the short term. Jasmine Lu, head of Taiwan research at Morgan Stanley, said the student protests over the trade in services pact is unfavorable to Taiwan's stock market in the short term and has cast uncertainty over ongoing merchandise trade talks with China.
In the mid- and long-term, however, the performance of Taiwan stocks will hinge on fundamentals, which still appear good, Lu said.
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