Replies to post #318 on Foreign Correspondence

[thepennyking]

Asian Stocks: Taiwan's TWSE Has Biggest Gain Since October 2002
March 29 (Bloomberg) -- Taiwan's TWSE Index had its biggest gain since October 2002 after President Chen Shui-bian agreed to a recount to settle his disputed election.

The TWSE rose 5.6 percent to 6474.11 at the 1:30 p.m. close in Taipei. It was the benchmark's biggest jump since Oct. 15, 2002, recouping more than half of last week's 10 percent loss. Taiwan Semiconductor Manufacturing Co. and Cathay Financial Holding Co. led gains.

``A speedy recount is the best solution to end the political deadlock,'' said Tom Fu, who helps manage $4.5 billion at Prudential Securities Investment Trust Co. in Taipei. ``That will allow investors to refocus on market fundamentals.''

Elsewhere, Japan's Nikkei 225 Stock Average shed 0.5 percent to 11,718.24 after the yen strengthened against the dollar on a London-based Times newspaper report saying Japan's policy of selling yen ``has officially come to an end.'' Kyocera Corp. fell.

Thailand's SET index slid 1.8 percent, the biggest drop in Asian stock benchmarks, on concern violence may be spreading in the Muslim-dominated south after a bomb blast on Saturday injured tourists. PTT Pcl, the state-controlled energy company, declined.

The MSCI Asia-Pacific Index, which tracks the performance of 856 stocks in 14 countries, added 0.3 percent to 95.55. Benchmarks in South Korea and New Zealand rose, while all other indexes in Asia apart from Japan's Topix index fell.

Peaceful Protests

Only three of the 642 stocks traded on the Taiwan Stock Exchange declined today. Taiwan Semiconductor, the island's biggest company by value, jumped 5.1 percent to NT$61.50.

Cathay Financial climbed 6.3 percent to NT$59. Shares of other financial shares such as First Financial Holding Co., Hua Nan Financial Holdings Co. and Chang Hwa Commercial Bank rose on optimism they may benefit from an election victory by Chen. Chen has been restructuring the industry by pressuring companies to cut off delinquent debtors and combine their businesses.

The government set up a NT$140 billion ($4.2 billion) fund to bail out bankrupt lenders and passed the Financial Holding Company Act in 2001, allowing lenders and insurers to merge.

``Financial industry reform is what most investors can agree on as a major achievement in Chen's first term,'' said Liu Juming, who helps manages $2 billion at Fuh-Wa Asset Management Co. ``The worse time is over for financial companies.''

Chen agreed to a recount of the presidential vote and the establishment of an independent task force to probe charges that he faked an assassination attempt to win votes. About 500,000 opposition protestors who rallied on Saturday dispersed peacefully. Chen had won by 30,000 of 13 million votes cast.

Until the election, Taiwan was Asia's second-best performing stock market this year. The TWSE had gained 16 percent, more than any other benchmark except those in China. Its March 4 peak of 7034.10 represented a 70 percent gain from last year's low, set on April 28.

Yen Gains

Kyocera, the world's largest maker of ceramic packaging used to protect finished microchips, declined 2.1 percent to 8,710 yen. Shin-Etsu Chemical Co., the world's biggest maker of polyvinyl chloride resin and silicon wafers, lost 2.3 percent to 4,350 yen.

Overseas sales at Kyocera and Shin-Etsu Chemical account for more than half of their revenue. Kyocera has gained more than a fifth this year, and Shin-Etsu has risen as much as 6 percent.

Japan no longer needs a weaker currency to bolster exports, the Times of London reported, citing unnamed employees at the Bank of Japan. The country's central bank will only sell yen to buy dollars when there is ``extraordinary volatility'' in the market, the newspaper said.

``The report on Japan's currency policy change has sparked concern over the potential threat from a strong yen,'' said Yoshihisa Okamoto, who helps manage the equivalent of $2.1 billion in assets at Fuji Investment Management Co. in Tokyo. ``It became a great excuse for some to lock in the recent gains'' in share prices.

The yen has gained 14 percent in the past 12 months against the dollar threatening to lower the value of exporters' overseas earnings. It recently traded at 105.54 a dollar.

Bomb Blast

Thailand's SET fell 12.13 to 653.12. The benchmark, which more than doubled last year, is the world's worst performer this year, dropping 15 percent in dollar terms.

PTT shed 3.4 percent to 141 baht. Advanced Info Service Pcl, Thailand's No. 1 mobile-phone company, fell 4.4 percent to 86.50 baht.

A blast Saturday night in a town on the Malaysian border packed with nightspots and karaoke bars injured 28 people, the first time attacks have targeted civilians or tourist districts, Agence France-Presse reported. Government Spokesman Jakrapob Penkair didn't confirm the number injured.

``We believe that the violence in the Southern provinces of Thailand is now a major concern for investors,'' DBS Vickers Securities (Thailand) Co. said in a note to clients. ``There is so far no indication that the government is able to control'' the violence.

Samsung Electronics

South Korea's Kospi index climbed 1.2 percent, led by Samsung Electronics Co. and LG Electronics Co., after Samsung Securities Co. raised its stock-price estimates for the two companies because of higher earnings prospects.

Samsung Electronics, the world's largest maker of computer- memory chips, climbed 1.8 percent to 555,000 won. Samsung Electronics's shares may rise as high as 730,000 won in the next six months, said Samsung Securities, which raised its share-price estimate by 10.6 percent.

LG Electronics, South Korea's second-largest electronics maker, gained 3 percent to 68,700 won. Samsung Securities said it raised its six-month stock-price estimate by 5.4 percent to 78,000 won, as the company's television sales will lift earnings.



Advanced Info Service Pcl (ADVANC TB)
Cathay Financial Holding Co. (2882 TT)
Kyocera Corp. (6971 JP)
LG Electronics Inc. (066570 KS)
PTT Pcl (PTT TB)
Samsung Electronics Co. (005930 KS)
Shin-Etsu Chemical Co. (4063 JP)
Taiwan Semiconductor Manufacturing Co. (2330 TT)

To contact the reporter on this story:
George Hsu in Taipei at [e-mail]; Tomoko Yamazaki in Tokyo at [e-mail].

To contact the editor of this story:
Teo Chian Wei at [e-mail].
Last Updated: March 29, 2004 02:39 EST

[Amaunet]

This is a good analysis of the Taiwan and other assorted islands headache that China is suffering albeit I don’t think Japan will be happy to read it.

Under pressure at home, China plays patriotism card


REUTERS , TAIPEI
Monday, Mar 29, 2004,Page 3
Asserting authority over islands is becoming a headache for China's powerful communist leaders and their frustrations are mounting as they watch Taiwan inch toward independence and Hong Kong's desire for more democracy.

Beijing vented ire against Taiwan on Friday, vowing to do more than just stand idly by if political chaos in the country persists over the hotly disputed presidential election.

China also showed every sign of breaking a promise not to interfere in Hong Kong by saying it was time to end confusion over how the island city will choose its leader and legislature.

"China wants some measure of stability and predictability. Things must not get out of control," said Hong Kong political commentator Andy Ho.

One solution to calm things down in Hong Kong and Taiwan could be to play the patriotism card to unite Chinese. That chance came when seven activists were arrested by Japanese authorities after they landed last week on a chain of disputed and uninhabited rocky islands, claimed by China and Taiwan as the Diaoyus and by Japan as the Senkakus.

"The Diaoyu islands are the single issue of a common interest and concern to the mainland, Hong Kong and Taiwan," said one political analyst who asked not to be identified.

"It is to remind everyone that we have something in common," he said. "Even if the mainland isn't good, it's better than Japan. Anti-Japanese sentiment is a card the mainland can play at any time."

Chinese newspapers and television broadcasts have been filled with reports berating Japan and bemoaning the fate of the seven, deported to Shanghai on Friday. Beijing even allowed protesters to gather at the Japanese embassy and burn the Japanese flag.

"This is to deflect the attention of mainlanders from the Taiwan elections," said another analyst.

"This is also to stir up patriotism among Hong Kong residents," the analysts said.

China's 1.3 billion people have heard scarcely a word about Taiwan's third, and most closely fought, presidential elections on March 20. Only on Friday did the Taiwan Affairs office issued a harshly worded statement, saying it would not tolerate turmoil in the country.

Even that angry statement was more restrained than usual: a signal of China's dilemma, caught between hotheads eager to spit fire at the island as it edges toward declaring sovereignty and cooler brains urging restraint to prevent an anti-China backlash.

Neither camp can point to great success.

"You can say it's either bluster or it's a serious warning," Susan Shirk, professor at the University of California at San Diego and deputy assistant secretary of state under US president Bill Clinton, said of the latest warning.

"I don't think we should discount the fact that it might be a serious warning because right now Beijing has been so quiet and accommodating before the election that they probably feel that they need to establish the threat to use force credibly again," she said.

China retains the right to use force to recover Taiwan. Recent weeks have seen few such threats.

"I do have some concern that this might be more than just bluster. Right now they have a need to restore the credibility of their threat to use force because they have been so quiet before the election," Shirk said.

That is when the disputed rocks in the East China Sea become useful. China may have 500 missiles arrayed against Taiwan but it can hardly use them without triggering a US response.

Playing to the patriotic gallery is one of the few arrows in China's quiver which it can use far more easily, since it focuses on the resentment against Japan that dates back to World War II.

"There is a limit on what China can do about Taiwan. If it aims more missiles at the island, it will only give [President] Chen Shui-bian more ammunition," said Ma Ngok, social science professor at the Hong Kong University of Science and Technology.

"It can't do much to win hearts in Taiwan," he said.

And while Beijing is no doubt deeply concerned about the re-election of Chen, it must be relieved that his 0.2 percent margin of victory over Chinese Nationalist Party (KMT) Chairman Lien Chan, could restrain his second four-year mandate.

Nervous that calls for more democracy in Hong Kong will not only seep into the mainland, China can cite Taiwan's electoral confusion to back moves unveiled on Friday to bring Hong Kong back into line.

"The chaotic situation gives China a perfect excuse to tell Hong Kong not to pursue democracy," said Lo Chih-cheng, executive director of the Institute for National Policy Research, a private think-tank in Taipei.


http://www.taipeitimes.com/News/taiwan/archives/2004/03/29/2003108186



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