Taiwan markets rally as opposition wins presidency

By Baker Li

TAIPEI (Reuters) - Taiwan's stocks jumped 4 percent and its currency hit a decade high on Monday, as investors hoped for better trade ties and less political tension with China after the opposition's resounding win in the presidential election.

The stock market's main TAIEX share index ended with a gain of 340.36 points, to 8,865.35, after soaring 6.15 percent at the open -- its biggest intra-day percentage gain in more than seven years.

Some analysts predicted the stock market would punch through the 9,000 point mark after the victory by Nationalist Party (KMT) candidate Ma Ying-jeou, who favors closer trade ties and political dialogue with China, which considers self-ruled Taiwan its own territory.

Foreign investors were big buyers of Taiwan stocks on Monday, accumulating a total T$57.91 billion ($1.92 billion) worth of Taiwan shares, their second-biggest daily buying in history.

The Taiwan dollar also jumped, ending at a 10-1/2 year closing high of T$30.229 against the U.S. dollar, with daily trading volume hitting a record. The Taiwan dollar is up nearly 7 percent so far this year.

"The market is really hot today and it's been very lively on the trading floor, as investors called in to buy into traditional and financial stocks," said Winston Tung, a branch manager at Fubon Financial's brokerage department, where the trading floor buzzed with chatter, laughter and phones ringing off the hook.

"Last week, people were still afraid to buy in case something bad happened during the election, but since everything went smoothly, funds are flowing back quickly into the market."

The quote boards at banks' brokerage rooms throughout the island were awash in a sea of red -- the color used for stocks that are up. Among the market's 2,000-plus listed companies, 1,974 ended up while only 307 were down.

All sectors rose on Monday, with top air carrier China Airlines (2610.TW), top financial holding company Cathay Financial (2882.TW), and tourism .THOI, construction .TCOI and China-related shares leading the market to its highest level in nearly five months.

Cathay Financial, the market's most active stock by turnover, surged by its daily 7 percent limit, sending the financial sub-index .TFNI up 5.9 percent. China Air jumped 2.7 percent and Hon Hai Precision (2317.TW), a big investor in China, gained 5.4 percent.

EUPHORIC MOOD

All of those sectors could benefit from closer ties with China, which has already received about $100 billion in Taiwan investment in the last 20 years and is the favorite manufacturing destination for Taiwanese firms.

In the mainland markets, shares of Fujian Cement (600802.SS) and other companies based in China's southeastern province of Fujian, near Taiwan, also rose in active trade on Monday, defying a drop in Shanghai's benchmark index .SSEC.

But some warned that the euphoric mood in the markets could be short-lived.

"This passion rally should only last for around two days," said Alex Huang, vice president of Mega Securities.