Taiwan stocks finished up 0.35 per cent on Monday,buoyed by optimism that a trade deal with China will lift business prospects,while some financial stocks continued to benefit from last week’s surprise interest rate rise.
The economic cooperation framework agreement,or ECFA,gives preferential treatment to Taiwan banks in setting up operations in China and removes tariffs from hundreds of Taiwanese products exported to the mainland.
Taiwan and China will also discuss an accord for insurance firms in follow-up talks to the ECFA deal,which will be signed this week.
The banking sub-index rose 2.2 per cent and transport ended up 2.13 per cent,with the index for plastics companies — also set to benefit from lower tariffs — up 1.2 per cent.
Their gains pushed the main TAIEX index up 26.08 points to close at 7,500.79.
“Financial shares are particularly strong as the ECFA comes up because banks hope they can do renminbi business at an early date in China,” said Michael On,managing director at Beyond Asset Management. “Marine shipping stocks are also expected to gain this week,hoping to see more goods shipped between China and Taiwan.”
Among banks,Chinatrust Financial was up 1.1 per cent. Among insurers,Union Insurance and First Insurance jumped 5.2 per cent and 6.9 per cent,respectively.
Shipper Evergreen Marine jumped 5 per cent and Yang Ming Marine was limit up with a 7 per cent gain. Formosa Plastics advanced 2 per cent.
“It was rotational buying and when financials were strong,many big tech shares weakened,” said Andrew Deng,analyst at Taiwan International Securities.
“If tech shares can’t catch up with financials,there will be limited upside for the big board,” Deng said,saying the TAIEX was unlikely to break the yearly moving average near 7,560 points this week.
Chip designer Medietak,the market’s most active stock by turnover,fell 3.5 per cent. Laptop PC vendor Asustek Computer lost 4.4 per cent.
Foreign investors were net sellers in the past three sessions,while they remained net buyers of T$17.76 billion in Taiwan shares so far in June.