Hon Hai leads as TAIEX hits four-month high

The TAIEX climbed to a four-month high yesterday, led by Hon Hai Precision Industry Co (鴻海精密) after a Chinese-language newspaper reported that sales at the nation's biggest electronics manufacturer may surge this year on strong demand.

Quanta Computer Inc (廣達電腦) gained after saying Friday after the market closed that sales last month surged 80 percent from the same month a year earlier.

The TAIEX jumped 86.49, or 1.8 percent, to 4,826.94. That's its highest since Feb. 7. About three stocks rose for every one that declined.

The Taiwan Futures Index added 1.4 percent to 4,800.

The benchmark dropped as much as 0.3 percent after country was rocked by a 6.3-magnitude earthquake yesterday morning.

"Some investors sold shares immediately after the earthquake," said Simon Chao (趙永宏), who manages US$17 million at President Investment Trust Corp (統一投信).

After no damage was reported, they bought back the shares, he said.

Shareholders of Hon Hai Precision Industry Co approved a plan to sell about 206 million shares overseas, possibly raising about NT$23.7 billion (US$684 million).

The company, which makes PlayStation 2 video-game consoles for Sony Corp and personal computers for Dell Computer Corp, last year scrapped plans to sell US$690 million of shares overseas because of a slump in the electronics industry.

Hon Hai Precision jumped NT$7.50, or 6.6 percent, to NT$121.

Hon Hai's sales this year may reach NT$400 billion (US$11.5 billion), the newspaper reported. That's an increase of 55 percent from the NT$257.8 billion in sales the company reported last year.

Quanta Computer gained NT$4, or 5.8 percent, to NT$73. Last month's sales climbed to NT$20.7 billion from NT$11.5 billion last year. Sales were NT$20.6 billion in April.

"Companies with proven sales reports are favored, while others got dumped," said Tom Fu, who manages the equivalent of US$57.7 million for the Small Capital Fund at Prudential Securities Investment Trust Co.

Chunghwa Picture Tubes Ltd (中華映管) rose NT$0.75, or 6.6 percent, to NT$12.05. The company expects to raise about NT$15 billion to help build a new plant, the newspaper reported, citing the company chairman.

Chunghwa Picture expects to sell US$250 million of debt in the second half that's convertible into stock and sell 700 million new shares abroad, the report said. Based on the stock's closing price of NT$11.30 on June 6, the planned sale would raise NT$7.9 billion.

China Development Financial Holding Corp (中華開發金控) rose NT$0.40, or 3.1 percent, to NT$13.40. Lite-On Technology Corp (光寶科技) rose NT$1.30, or 3.6 percent, to NT$37.80. Sales last month more than doubled to NT$6.6 billion, Lite-On said after the close of trading on Friday.