Taiwan construction and tourism shares climbed in Taipei trading yesterday as prospects for warmer relations between Taiwan and the Chinese mainland helped mitigate concerns over global growth.

A weekend meeting between officials of Taiwan and the mainland spurred an index of construction stocks on the benchmark Taiex Index to climb 4.1 percent to its highest in almost 10 years, while the Taiex Tourist Index jumped 5.4 percent to a record. The Taiex lost 16.9, or 0.2 percent, to 8,892.68 points at the close in Taipei, Asia's third-best performer yesterday.

Chinese President Hu Jintao met Vincent Siew, chairman of the Taiwan-based Cross-Strait Common Market Foundation, at the Boao Forum for Asia in south China's Hainan Province at the weekend. Both parties discussed allowing more mainland tourists to visit the island while welcoming mainland investment in Taiwanese infrastructure projects.

"It is the Boao effect," Robyn Hsu, of Capital Investment Trust Corp in Taipei, told Bloomberg News. "Taiwan and China's mainland have both agreed in principle that direct flights and tourists are the first two steps they will take toward moving closer together."

Cathay Real Estate Development, Taiwan's second-largest developer, added NT$1.40, or 4.9 percent, to NT$30, its highest since March 1998. Shining Building Business, Taiwan's third-largest, climbed NT$2.50, or 2.3 percent, to a record NT$111.50.

Taiwan needs about NT$1.3 trillion (US$43 billion) of private-sector investment in infrastructure projects over the next eight years, and the island "welcomes investment from the mainland," Siew said at the Boao forum, which wrapped up on Sunday.

Formosa International Hotels, Taiwan's largest publicly-listed hotel operator, climbed NT$36, or 6.7 percent, to NT$577. The Ambassador Hotel, the second-largest, climbed NT$2.10, or 3.8 percent, to NT$57.40. Both stocks closed at record highs. The mainland wants direct transport links with Taiwan as soon as possible, which would mitigate the possible impact of the United States mortgage crisis, Chinese Commerce Minister Chen Deming said at the forum.

Taiwan's Taiex performance yesterday was bettered only by benchmarks in Sri Lanka and Pakistan.

(Shanghai Daily April 15, 2008)