Taiwan stocks skyrocket on government investment

Dec 21, 2011, 8:55 GMT

Taipei - Taiwan shares led Asian markets Wednesday with a 4.56-per-cent surge after the government pledged to use an emergency fund to stabilize prices ahead of elections.

Stocks in Taiwan have performed poorly in the past six months, declining 24 per cent since a high on January 28. The bourse's weakness prompted government officials to announce Tuesday that they would use a 500-billion-Taiwan-dollar (16.5-billion-US-dollar) National Financial Stabilization Fund to buy shares on the market.

Officials declined to comment on how soon the fund would be used or what securities the government would buy.

Still, the move boosted investor confidence, sending the Taiex index up 303.84 points to close at 6966.48.

Financial stocks soared after Taiwan's regulators announced Tuesday that they would let Chinese banks buy up to a 5-per-cent stake in Taiwan banks starting January 2. Other Chinese institutional investors may control up to 10 per cent.

Many Taiwan bank shares were trading near the maximum 7-per-cent daily gain allowed on the exchange, including Cathay Financial Holding Co at 6.96 per cent, Fubon Financial Holding Co at 6.96 per cent and Mega Financial Holding Co at 6.8 per cent.

Phone maker HTC Corp continued its comeback streak by hitting the daily limit for a second-consecutive day, increasing 6.93 per cent, as investors remained positive over a favorable patent lawsuit ruling by a US federal agency Monday as well as a stock buyback plan announced by the company Tuesday.

On the currency market, the US dollar fell against the Taiwan dollar, dipping to 30.285 Taiwan dollars from 30.353 Taiwan dollars late Tuesday.