Taiwan stocks surged 5.6 percent at Monday's close as political tensions eased after a peaceful rally and moves toward a recount of a disputed presidential election over the weekend sparked across-the-board buying.
The main TAIEX ended up 5.57 percent at 6,474.11 on gains in heavily weighted financial and tech issues like UMC, marking its largest daily percentage gain since October 2002 and recouping more than half of the 10 percent lost last week following the election.
Turnover rose to T$112.43 billion from T$97.79 billion on Friday. The index had been Asia's best performer outside of China this year before the election.
"Investors were encouraged by the positive political developments and some of them started to target companies that have better earnings prospects," said Albert Lin, vice president at Hotung Securities.
After the narrow victory by President Chen Shui-bian triggered weeklong protests and demands for a recount, Chen agreed on Saturday to a recount and to meeting defeated presidential candidate Lien Chan to work out the details.
United Microelectronics Corp (UMC), the world's No 2 contract chipmaker, surged the daily seven percent limit to T$30.6 and Powerchip was limit-up at T$30.6, leading the tech sub-index 5.47 percent higher.
Investors chased display screen shares in anticipation that higher screen prices and rising demand will boost earnings.
AU Optronics, the world's third-largest display maker, rose to its daily limit at T$60.50 and rival Chi Mei was also limit-up at T$57.00.
The battered transportation issues staged a rebound after last week's sharp losses.
The market had expected a Lien victory, which many analysts said would improve transportation and commercial ties with China.
China Airlines, the island's largest carrier, was limit-up at T$19.50 and rival EVA Airways jumped to its daily limit at T$17.10. Both stocks slumped 29 percent last week.
The over-the-counter TAISDAQ index surged 6.04 percent to 141.97, while April TAIEX index futures jumped 5.65 percent at 6,471.
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