Biotech shares surge on health upgrade plans

Over ten biotech shares traded on the Taiwan Stock Exchange and over-the-counter market surged to their daily limits yesterday. Their rise partially contributed to a surge of the benchmark index TAIEX, which advanced 87.87 points, or 1.28 percent, to close at 6,938.86.

On Sunday, President Ma Ying-jeou attended the annual conference of the Health Promoting Hospitals Association of Taiwan, where he urged leading hospitals to jointly upgrade the health industry to help improve public health.

He said hospitals should take advantage of the nation's rapidly progressing biotechnology industry to explore new opportunities and expand the health care sector into another market niche for Taiwan's economy.

Investors also banked on a surge in profits for biotech and pharmaceutical firms, as Taiwan reported its first severe case of domestic A(H1N1) influenza on July 17. A 34-year-old man came down with a fever, cough and sore throat on July 2 and was hospitalized on July 9 with abnormally fast breathing. He is being treated at an intensive care unit and shows signs of multiple organ failure, according to the Center for Disease Control.

The Department of Health (DOH) and the Bureau of National Health Insurance are working to include the influenza drug Tamiflu in the national health insurance coverage, DOH Minister Yeh Ching-chuan said Saturday.

These factors fueled the trading of biotech shares yesterday, with Hi-Clearance Inc., which was new to the over-the-counter GreTai Securities Market, surging nearly 188 percent to NT$126 from its initial public offering price of NT$45.

Hi-Clearance's performance also lifted other biotech shares such as St. Shine Optical Co. and TTY Biopharm Co.

One analyst, however, asked investors to exercise caution, as biotech shares have been hot for several days, with most of them having price-earnings ratio of over 30.

“A correction may occur once interest in biotech wanes,” he said.

Also yesterday, Taiwan's share prices surged above the 6,900 mark to finish higher for the fifth consecutive trading day.

The local bourse opened high at 6,921.64 on upbeat quarterly earning reports from major U.S. companies and on news that Taiwan is likely to hold talks with China at the end of this year on an economic cooperation framework agreement (ECFA) between the two sides. It later retreated to the day's low of 6,861.02 before reaching a high of 6,961.45.

A total of 5.19 billion shares changed hands on market turnover of NT$143.68 billion.

All eight major stock categories gained ground, with paper and pulp stocks moving up the most at 3.01 percent. Banking and financial issues rose 2.28 percent, plastics and chemicals issues advanced 2.11 percent, construction shares increased 1.75 percent, machinery and electronics issues gained 0.91 percent, textile stocks increased 0.63 percent, foodstuff shares went up 0.41 percent and cement stocks gained 0.3 percent.

Gainers outnumbered losers 1,623 to 715,with 173 stocks remaining unchanged.

Foreign institutional investors were net buyers of NT$10.99 billion-worth of shares.

One analyst said the market could challenge the 7,084-mark in the coming days if market volume surges above NT$160 billion, otherwise it will hover between 6,500 and 7,084.

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