Taiwan stocks rally on more government stimulus

Dec 23, 2011, 9:08 GMT

Taipei - Taiwan's stock market led Asian indices higher Friday with a 2.07-per-cent increase as the Taiwan government announced more stocking stuffers to boost the insurance and home appliance sectors.

The Taiex index rose 144.38 points to close at 7,110.73.

The index capped off a volatile week that saw shares reach a two-year low Monday, but the bourse rebounded to a 4.8-per-cent gain for the week after the government injected emergency funds into the market to help shore up prices.

Friday's rally was buoyed by two more announcements from Taiwan officials.

The territory's financial regulators said Thursday after the market closed that they would allow insurance companies to use their emergency reserve funds to write down up to 50 per cent of their foreign exchange losses caused by the strengthening Taiwan dollar. The move allows insurers to save the cost of reinsuring such losses through third parties.

Shares of insurance companies surged on the news. Cathay Financial Holdings Co, Taiwan's largest life insurer, reached the daily limit with a gain of 6.9 per cent while China Life Insurance Co also hit the limit with an increase of 6.84 per cent.

Home appliance manufacturers benefited from an announcement by Taiwan President Ma Ying-jeou Thursday that the government would begin a subsidy in January to help consumers replace their old air conditioners, refrigerators and washing machines with newer, more energy-efficient models.

Appliance maker Sampo Corp rose 6.99 per cent while Tatung Co shares added 3.05 per cent.

On the currency market, the US dollar weakened against the Taiwan dollar, declining to 30.296 Taiwan dollars from Thursday's close of 30.325 Taiwan dollars.