Taiwan stocks may rise on new tourist rules

Visitors from mainland Chinese will be able to visit Taiwan independently — not just part of organized groups — as early as June, Taiwan’s Premier Wu Den-yih announced this month.

Analysts at Barclays Capital said the reforms, which are part of a greater push toward economic liberalization between Taiwan and the mainland, have contributed to an upgrade in its 2011 Taiwan gross domestic product forecast to 6%, up from 5.2% previously.

Last week, Taiwan’s financial regulator also agreed to allow offshore units and overseas branches of Taiwanese banks to conduct business in yuan. Read more about Taiwan expanding use of the yuan.

“It is part of the increasing contact between the mainland and Taiwan. First it was manufacturing, then it moved onto services. … [Now] they are increasing the tourism quota and liberalization,” Barclays Capital economist Rahul Bajoria said.“It’s pretty significant, the amount of growth momentum that has been built in Taiwan,” Bajoria said.

Despite the underlying economic strength, Taiwan’s Taiex index has lost 1.7% since the start of the year, but has moved higher more recently, with gains of 3.6% over the past three months.

New tourism rules

At present, visitors from mainland China are permitted to visit Taiwan only as part of tour groups, after an agreement between the nations on cross-strait travel was settled in 2008.

The number of group tourists from mainland China rose from an initial daily average of between 200 and 300 visitors, to 3,200 visitors in the first quarter of 2010, according to the Taiwan Strait Tourism Association.It’s hoped the impact of the latest move will further the trend.

The new arrangements cover tourists from Beijing and Shanghai, and will likely be extended to Chengdu, Chongqing, Guangzhou and Xiamen, Wu said in a statement in May.The daily quota will be set at 500 individuals per day, with a possible increase if Taiwan’s tourism infrastructure can cope with additional demand, Wu said.

Sectors to watch

Analysts at Barclays Capital forecast the new laws will increase the number of mainland Chinese tourists to 3 million in 2011, and 4 million in 2012, up from 1.6 million last year.

Source = marketwatch