Taiwan stocks rose 2.08 percent on Thursday to a seven-month closing high, as financial shares such as Cathay Financial rallied ahead of the potential signing of a financial co-operation with China later this year. The main TAIEX share index closed 121.98 points higher at 5,997.17, its strongest finish since September 25, following solid gains on Wall Street overnight.
Turnover was active at an 11-month high of T$173 billion ($5.1 billion), up from T$148.7 billion a day earlier. The financial sub-index was the top advancer, closing the session 5.52 percent higher. Cathay Financial, Taiwan's largest-listed financial holding firm, and rival Chinatrust Financial both jumped by their 7 percent daily limit.
"There's a problem of overbanking in Taiwan. The potential signing of a memorandum of understanding (MOU) with China will be an important step for Taiwan's financial sector," said Karen Lin, a fund manager at Paradigm Asset Management Co Taiwan and China will have preliminary discussions on Saturday in the run-up to official negotiations across the Taiwan Strait, which some local media said are likely to take place at the end of April. Such talks would iron out many of the details, including possibly those surrounding a financial MOU, expected to be the centrepiece of this round, allowing banks to invest across the Taiwan Strait.
Separately, a Taiwan delegation, which includes chairmen of Cathay Financial and Fubon Financial, will ask China to sign the Economic Co-operation Framework Agreement (ECFA) with Taiwan when the delegation meets Chinese Premier Wen Jiabao in Boao over the weekend, a local newspaper reported. Shares of Hon Hai Precision, Taiwan's biggest electronics parts maker, rose 0.9 percent after saying it aimed a 30 percent rise in sales this year.
In the DRAM sector, shares rallied on rising spot prices. Powerchip and Nanya Tech, Taiwan's top DRAM makers, ended limit-up. China Steel, Taiwan's top steel maker, rose 5.64 percent after the firm said it was in talks with three of its top China peers to jointly invest in overseas miners. The steel and iron sub-index gained 4 percent.