Taiwan stocks rose 2.95 percent on Wednesday, their biggest daily jump in nearly one month, led by financial shares including Cathay Financial on increasing hopes that a financial agreement with China will be signed soon. The main TAIEX share index closed up 182.61 points at 6,380.08, marking its best one-day percentage rise since May 27 and the highest close in more than a week.
Turnover was moderate at T$128.0 billion ($3.9 billion), up from Tuesday's T$90.13 billion. The banking and insurance sub-index, the top winner of all sub-indexes, surged 6.43 percent, with Cathay Financial, Taiwan's top listed financial holding firm, ending 7 percent limit-up. "Financial shares jumped on rumours that the MOU will be signed within days," said Masterlink Investment Advisory vice-president Tom Tang.
Taiwan and China have recently signed a financial deal, paving the way for a memorandum of understanding (MOU) on financial supervision in the near future. That has pushed financial shares up 71 percent since they hit the year's trough in early March, outpacing a 42 percent rise by the broader market during the same period.
Some legislators and executives of Taiwan's financial companies will arrive in China on July 1 on a tour that should facilitate financial ties with China. However, an official from Taiwan's Financial Supervisory Commission, who declined to be named, on Wednesday said he was not sure when both sides would sign an MOU, and that chances were not high the agreement would be signed next week.
"There is a lot of merit to the MOU and the long-term secular theme of Taiwan/China," said Ivan Leung, chief investment strategist with J.P. Morgan Private Bank in Hong Kong. "But if you're talking about whether it's going to affect earnings and be positive for GDP growth, I think that's not going to be as significant as the stock market reflects."
First Financial rose 6 percent after a newspaper reported that the firm was likely to join another financial group to bid for the sale of Nan Shan Life, AIG's Taiwan life insurance unit. Earlier on Wednesday, a spokesman said they had yet to evaluate the deal.
Chinatrust Financial went limit-up after a local newspaper said the firm's banking arm Chinatrust Commercial Bank planned to sell its headquarters in the Taipei city, with an estimated price of T$15 billion. The property sector rose following the recent upgrade of Taipei county's status to a municipality, which could make more construction funds available.
Real estate developer Farglory rose 2.2 percent, leading the construction sub-index up by 2.92 percent. Quanta Computer, the world's biggest contract maker of laptop PCs, rose 1.52 percent after a newspaper report said the company could start shipping mini netbooks for Nokia for the mobile computing market. The computer and peripherals sub-index rose 1.78 percent, while the electronic sub-index gained 2.18 percent.