Taiwan Auto Shares Surge on China Subsidy Program
2009-07-20 Source：english.chinabuses.com
Summarize： Vehicle-related shares in Taiwan surged in early trade on Wednesday after China announced plans to offer subsidies of up to 6,000 yuan ($878) to consumers who replace their old vehicles with new ones ...
Vehicle-related shares in Taiwan surged in early trade on Wednesday after China announced plans to offer subsidies of up to 6,000 yuan ($878) to consumers who replace their old vehicles with new ones.
At 0209 GMT, Taiwanese auto-parts makers Tong Yang and TYC Brother both surged by their daily 7 percent maximum limits to T$32.30 and T$20.90, respectively, outperforming the benchmark TAIEX index's 1.59 percent gain.
China announced on Tuesday it would offer subsidies of between 3,000 and 6,000 yuan to consumers who replace their existing vehicles, as part of plans to boost domestic spending, the country's Ministry of Commerce said in a statement published on its website www.mofcom.gov.cn.
Shares of Taiwan's carmakers also climbed and outperformed their counterparts in the region, including Japan's Toyota and South Korea's Hyundai.
Taiwan's Yulon Motor and China Motor were up about 3 and 4 percent, respectively, while the broader automobile sub-index rose 2.7 percent.
Beijing's moves to boost domestic spending as it struggles to maintain economic growth has benefitted companies in Taiwan, a former political rival and a self-ruled island that China considers part of its territory.
Many technology companies in Taiwan, including heavyweights such as TSMC and Hon Hai, have seen an uptick in business on Chinese moves to cultivate greater consumer demand, and analysts believe the auto industry may be next.
"It does look like a sustainable rally right now," said Kevin Huang, a fund manager at King's Town Bank. "You see what happened with the technology companies, and a single move by China could easily benefit auto companies too."
Other carmakers in the region were up less strongly. Toyota and Honda were both up less than 1 percent, in line with a 0.46 percent advance on the benchmark Nikkei 225 share index.
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