Technical bounce boosts TAIEX
Share prices closed up 1.51 percent yesterday on a technical rebound with financial and electronic heavyweights in focus, dealers said.
The weighted index rose 116.94 points to finish at the day’s high of 7,855.06, off a low of 7,679.08, on turnover of NT$109.35 billion (US$3.59 billion).
Leading the upside, the financial sector closed up 2.51 percent and the electronics sector 1.95 percent higher.
Judging from interest targeting heavily weighted financial and electronics stocks, dealers suspected government-owned funds played a role in the upside.
“The government cannot afford to see further falls in the bourse. Otherwise, investor confidence would have been further dampened,” Grand Cathay Securities (大華證券) analyst Mars Hsu said.
China Bills Finance to buy IBT
Taiwan’s China Bills Finance Corp (中華票券) will buy its biggest shareholder, Industrial Bank of Taiwan (IBT, 台灣工銀), through a share swap worth NT$22 billion (US$725 million) to build an investment banking business.
Each IBT share will be exchanged for 1.24 shares of the buyer, China Bills chairman Lee Ming-jih (李明紀) said yesterday. That values IBT shares at NT$9.21 apiece, or a 2.4 percent premium over its closing value yesterday.
The transaction will be completed on April 1 next year, Lee said.
Government to buy back bills
The government will buy back treasury bills for the first time in 10 years to help meet investor demand for funds, the Ministry of Finance said on its Web site yesterday.
On Monday the government will buy back NT$25 billion in 364-day bills that will mature on April 13 next year, the ministry said.
New HK exchange planned
Hong Kong plans to launch a new exchange to trade fuel oil and other commodities in an effort to capitalize on the booming market for raw materials in China, officials said yesterday.
The Hong Kong Mercantile Exchange will trade US dollar oil contracts when it opens in the first quarter of next year, and then expand into other commodities trading, the exchange said in a statement.
The fuel oil, to be stored along southern China’s border, will be available for delivery in China or overseas.
Backers say the exchange would be a bridge between China and global investors, helping set prices that better reflect the country’s surging demand for oil and other raw materials.
Monetary aggregates higher
The annual growth rate of the monetary aggregates M1A, M1B and M2 stood at 2.46 percent, minus 1.14 percent and 2.34 percent respectively last month, according to statistics released by the central bank yesterday.
The figures were higher than last month’s, the agency said, attributing the trend to continual growth in bank credit.
The M2 figure amounted to 2.28 percent, however, after being adjusted for the merger of China United Trust and Investment Corporation (中聯信託投資公司) and Cathay United Bank (國泰世華銀行).
For the first five months of the year, the average annual growth rates of M1A, M1B and M2 were 1.36 percent, minus 1.28 percent and 1.74 percent respectively, the central bank added.
NT dollar rises
The NT dollar climbed against the US dollar on the Taipei Foreign Exchange yesterday, gaining NT$0.057 to close at NT$30.380. A total of US$1.15 billion changed hands during the day’s trading.
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
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