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Stocks

Presidential plays emerge as market eyes hopefuls' mainland stances

HONG KONG -- Investors are beginning to seek out Taiwanese stocks that may benefit from policies favored by the two main contenders in next year's presidential election, both of whom happen to be women.

     The ruling Kuomintang named Hung Hsiu-chu, vice president of the Legislative Yuan, as its candidate last week and will make it official at a party congress next month. She will face off against opposition Democratic Progressive Party leader Tsai Ing-wen, whose party declared her its candidate in April. With voters going to the polls in January, Taiwan may get a female president before the U.S. does.

     As a waishengren -- a person born on the Chinese mainland or descended from mainlanders -- Hung is expected to take a conciliatory approach toward the mainland if elected. Taiwan would move even further toward strengthening the cross-strait economic partnership, says Liu Kun-hsi, president of MasterLink Securities Investment Advisory. Mainland-linked stocks attracting attention for their potential for mainland growth include Taiwan Cement and food and consumer goods group Uni-President Enterprises. Both advanced Monday.

     Meanwhile, semiconductor developer MediaTek and other information technology stocks are seen as plays on the Internet of Things, a trend toward the networking of everyday objects that overlaps with Tsai's vision of a "Smart Taiwan." As vice president of the Executive Yuan, Tsai supported the Taiwanese biotech industry. The expectations generated by her candidacy have lifted Grape King Bio close to a year-to-date high. The stock made big gains Monday.

     Tsai's DPP, which favors keeping China at arm's length, is gaining momentum ahead of the legislative and presidential elections. Local elections last November, seen as an indicator of how next year's races could play out, yielded a number of victories for the party, which backed the winning candidate for mayor of Taipei. But Tsai, who is making her second run for the presidency, has said repeatedly that she would maintain the status quo in cross-strait relations.

     "Considering the effect it would have on the economy, [Tsai] couldn't significantly reverse the course of policy toward China," says Fu Hung-man, sales director at Zhongcai Securities.

     But the mainland's stance toward Taiwan may change if the DPP retakes power.

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