TAIPEI: Stock prices soared in Taiwan on Monday as investors welcomed the presidential election victory over the weekend of Ma Ying-jeou, a Nationalist who has called for closer relations with mainland China that could spur the islands lagging economy.

The stock market jumped 6.2 percent at the opening, and closed 4 percent higher, on top of a 4.5 percent rise last week on expectations that Ma would win. The New Taiwan dollar rose 1.1 percent to 30.229 to the U.S. dollar, the strongest in more than 10 years.

Ma said in an interview Sunday that he hoped to have an immediate effect on the economy in his first 100 days in office by opening up Taiwan to mainland Chinese tourism. Taiwan is virtually closed to mainland tourists now for fear that spies and saboteurs might join tour groups and later stay behind, although groups of academics and professionals already come.

Ma acknowledged that economic weakness overseas could hurt Taiwan, but said that the answer was to increase spending at home. “The global economic slowdown is a reality we cannot change - what we can change is to enlarge domestic demand,” he said.

To do that, Ma plans a $130 billion spending program over the next eight years, mostly for infrastructure projects. He plans to enlarge ports and airports up and down Taiwans western coast to accommodate greater trade and travel with the mainland, and expand rail and highway links. He also plans a variety of ambitious environmental projects that may require large numbers of fairly low-skilled workers, like replanting extensive forests in southern Taiwan to reduce the risk of landslides.

Ma said that the government would also give special attention to building up Taiwans financial services, tourism, health and cultural industries.

“We think if we push ahead, we can really revitalize the economy,” he said.

Economic worries played a central role in Mas decisive victory on Saturday, by a margin of 58 percent to 42 percent, over Frank Hsieh of the Democratic Progressive Party.

Beijing officials still have not issued any response to Mas victory, but had made clear before the vote that they would prefer Ma.

The current president of Taiwan, Chen Shui-bian of the Democratic Progressive Party, has had frosty relations with the mainland as he had sought greater political separation for Taiwan.

Taiwanese investment on the mainland has dropped by nearly half during Chens nearly eight years in office, to about $2 billion a year, as he has enforced limits on how much capital can be invested by Taiwanese companies on the mainland - limits that Ma said he would lift.

Mas running mate, Vincent Siew, is a longtime advocate of a “common market” with the mainland, an idea influenced by economic integration in Europe.

Hsieh attacked this idea as leading to an influx of millions of low-wage mainland laborers into Taiwan. A Democratic Progressive Party rally featured a so-called Trojan horse that, when its belly opened, turned out to have poisoned mainland food inside, a reference to recent health and safety scandals involving mainland products.

Ma has since said that he favors a closer economic cooperation agreement with the mainland that would be based on World Trade Organization free trade principles.

Ma promised during the election campaign that he would raise Taiwans annual economic growth rate to 6 percent and ensure that a broader swath of Taiwanese society benefits from growth.

While the Taiwanese economy grew 5.7 percent last year, the gains were heavily concentrated among professionals with jobs in the islands highly successful computer manufacturing industry and among entrepreneurs with mainland investments, as many factories have moved to the mainland so as to tap low-cost labor there.

FedEx shut down a 12-year-old package distribution center Aug. 16 last year in Kaohsiung as freight volumes dropped. Ma said that if he is successful in introducing direct flights to and from the mainland, Taiwan would start to revive as a logistics center; FedEx declined to comment on whether it would reopen the Kaohsiung operation if direct flights begin.

Enoch Fung, a Goldman Sachs economist, predicted in a research note Monday that economic growth in Taiwan would slow to 3.8 percent this year and 4.6 percent next year because of weaker demand for exports. But Fung also said that closer cross-straits ties would raise the possibility that actual growth could be higher.

Ma said that he wanted to conclude a series of free-trade agreements with other Asian countries and with the United States - a task that could be difficult given Beijing officials strong opposition to most international agreements with Taiwan. Ma suggested that these objections could be finessed by having Taiwan conclude trade pacts using the name it used to join the World Trade Organization: the customs territory of Taiwan, Penghu, Kinmen and Matsu.

HONG KONG: Asian balance sheets remain healthy and economic growth resilient despite the global credit crunch, but by one market measure, Asian bond issuers are an even worse risk than they were during the financial crisis a decade ago.

The credit problems that originated in the U.S. housing sector have led to much smaller asset write-downs in Asia than in Europe and the United States, yet the cost of insuring against Asian debt defaults, as measured by credit default swaps, has reached record high levels.

“Asian borrowers are asking: Whats subprime? Why do I care? Whats going on in New Jersey shouldnt impact the strength of my balance sheet, ” Fergus Edwards of UBS said.

One big problem, analysts say, is the relative lack of liquidity in Asian debt, compared with that in more developed European or U.S. markets, although hard data are hard to find in the opaque, over-the-counter credit default swaps market.

According to one default swap trader, global investors, when offered a choice between similarly rated issues, will more often than not plump for U.S. or European bonds over Asian debt because those are easier to sell quickly if the need arises. “Fundamentals-wise, Asia is definitely stronger than the U.S. or Europe,” said the trader, who spoke anonymously because he was not authorized to speak to reporters. “But people still prefer to be in European or U.S. names because they are much bigger. Market liquidity is bigger and volumes are larger.”

That helps explain why levels of Asian credit default swaps - which are priced in terms of percentage points above the London interbank offered rate - are well above the levels seen elsewhere in the world. The levels are also above those at the time of the Asian financial crisis, making it prohibitively costly for Asian issuers to raise money from overseas borrowers.

Any recovery in the regions credit markets depends on an easing in a global liquidity crunch in which Asia has played little part, compounding the frustration felt by investors.

Asian bankers said that clients were complaining about having to pay for U.S. problems.

“Asia is still strong,” said the head of Asian debt capital markets for a major U.S. investment bank, who asked not to be identified discussing conversations with clients. “Credits are improving, economies are improving, balance sheets are improving, therefore borrowing costs should be improving.”

The iTraxx Asia high-yield index excluding Japan, which tracks the cost of insuring against the default of 20 noninvestment-grade names like Hynix Semiconductor in South Korea, hit a record at about 6.60 percentage points last week.

That means that insuring $10 million in the underlying debt over five years would cost an investor about $660,000, more than triple the $210,000 paid in mid-October, when bond spreads started to shoot up as a result of the crisis.

In comparison, the iTraxx crossover index, which measures 50 similar “junk”-rated credits in Europe, hit about 5.80 percentage points last week.

Put another way, the iTraxx index for Asia is implying a five-year default probability of at least 30 percent, according to some calculations, or that more than six names will default in that period.

Many see no sense in that.

According to Standard Poors Ratings Services, none of the 12 defaults seen so far this year has come from Asia. Furthermore, Asia has seen only one rated issuer default in each of the previous three years, and of the 114 rated issuers the agency sees at risk of defaulting, only three are Asian - G Steel and the paper producer Advance Agro from Thailand, and the Nasdaq-listed semiconductor firm ASAT Holdings from Hong Kong.

“Its a very difficult time for investors,” said Clifford Lau at Pramerica Investment Management in Singapore. “The problem is that we are not trading at individual credit fundamentals. Its frustrating.”

“There is a lot of value in the Asian fixed income market already, but there are so many uncertainties out there making investors only look to sell their bonds rather than pick up risk at the moment,” Lau said.

With no end in sight for the global financial crisis, analysts say it will be difficult for Asian markets to recover on their own, even if economic growth in the region is expected to outperform that in Europe and the United States.

“We are not that exposed to subprime-related risk, but we are talking about global risk reduction, and no region or asset class is being spared,” Lau said.

NEW YORK—Accredited Home Lenders Holding () Co. said Monday it had sued private equity firm Lone Star Funds, seeking to force it to complete the $400 million takeover of the money-losing subprime mortgage lender.

Lone Star had agreed in June to pay $15.10 per share for San Diego-based Accredited. On Friday, however, Lone Star said it would not go through with the buyout, citing a “drastic deterioration in the financial and operational condition of the company.”

Accredited said on Monday that the merger agreement “expressly provides that Lone Star may not refuse to honor its obligations based on any deterioration in the business.” If shareholders tender more than half of Accredited shares by Tuesday, all conditions of the merger will be met, Accredited said.

Last week, Accredited projected a second-quarter net loss of $40 million to $60 million. It said it had made 59 percent fewer loans than a year earlier and that the delinquency rate among loans it serviced had tripled.

The company also said it had ended July with $175 million of liquidity, down from $240 million at the end of June.

Earlier in August, Accredited said its survival was in doubt and that a bankruptcy filing was a possibility.