Cathay, Chinatrust lead second day of stock gains

Stocks gained for the second day, led by Cathay Financial Holding Co (國泰金控) and Chinatrust Financial Holding Company Ltd (中信金控), on optimism the Legislative Yuan will pass a budget to expand the financial restructuring fund to help dispose of lenders' bad loans.

President Chen Shui-bian (陳水扁), who faces re-election next March, urged lawmakers to pass funding for its bad-loan clean-up fund, a statement from the government said. The legislative session starts on Friday.

"Financial companies will benefit from the government attempt to reform the industry," said Edward Tseng, who manages the US$21 million Tech Fund at Ta Chong Investment Trust Corp (大眾投信).

"The government is serious this time because of the presidential election," he said.

The TAIEX rose 40.96, or 0.7 percent, to 5,691.79, adding to Friday's 2.3 percent gain. The turnover was NT$101.80 billion (US$2.98 billion). The futures contract for September delivery climbed 0.9 percent to 5,717.

Cathay Financial, Taiwan's biggest financial services company, jumped NT$2.30, or 5.4 percent, to NT$44.90. Chinatrust Financial, owner of Taiwan's largest credit-card issuer, climbed NT$0.09, or 3.2 percent, to NT$28.70.

Asustek Computer Inc (華碩電腦), the nation's largest maker of the boards that hold the chips that run computers, fell NT$2.50, or 2.7 percent, to NT$89.50. Jenny Lai, an analyst at J.P. Morgan Chase & Co, rated the stock "underweight," citing sluggish gross margin growth.

Asustek Computer said Friday after the market closed that second-quarter profit surged 92 percent.