FTSE may upgrade Taiwan market

Taiwanese shares have been jittery in recent weeks

Taiwan and South Korea could be upgraded to developed-market status by the share-index providers FTSE Group.

FTSE Group's market rankings guides fund managers in deciding where to put billions of dollars of pension funds.

Moving up the ladder could bring a rush of investment into local stock markets, as well as spreading the ripples from their political upheavals.

FTSE Group has placed them both on the watch list and will make its decision in September 2004.

Until then, FTSE Group said it would "work with local exchanges to clarify [their] status".

Global fallout

South Korea and Taiwan have transformed themselves from poor, agricultural economies 50 years ago into hi-tech exporters with global electronics brands - Samsung, for instance - and huge computer chip factories.

As a result, their dramatic but troubled transitions to democracy since the 1980s have ruffled global markets.

Controversy over Taiwan's disputed election sent shares plunging in Asia at the start of the week and caused jitters on European and US markets.

The opposition Kuomintang (KMT) has accused Mr Chen of stealing the 20 March election, which it was expected to win.

An agreement between President Chen Shui-bian's Democratic People's Party and KMT for a rapid election recount fell apart within hours of being agreed on Wednesday 24 March.

Taipei's stock market closed 0.6% higher on Wednesday, after two of its biggest international players stepped in with plans to buy back their own shares.

TSMC and United Microelectronics, the world's top two makers of outsourced computer chips, offered to spend a combined total of $829m on the buybacks.

In South Korea, meanwhile, President Roh Moo-hyun has been suspended from his duties while the Constitutional Court ponders the opposition-led parliament's decision to impeach him.

Morgan Stanley Capital Index came out against an upgrade for either South Korea or Taiwan's markets in its February review.

MSCI and FTSE Group's rankings are both closely watched by fund managers.