Holding companies jump on hostile takeover report

Stocks rose yesterday, led by Cathay Financial Holding Co (國泰金控) and Fubon Financial Holding Co (富邦金控), after a Chinese-language newspaper reported the government will allow hostile takeovers to help lenders become more profitable.

The paper said that the Ministry of Finance will allow the insurance units of financial holding companies to acquire banks, securities firms or other insurers in the open market.

The TAIEX added 63.63, or 1.1 percent, to 5,867.05. More than two stocks rose for every one that declined. The Taiwan Futures Index rose 1 percent to 5,890.

"Allowing financial companies to use hostile takeovers will hasten industry consolidation," said Tracy Chen, a fund manager at Prudential Securities Investment Trust Co (保誠投信). "Taiwan needs fewer but bigger and stronger banks that can compete with overseas majors."

Cathay Financial rose NT$1.50, or 2.9 percent, to NT$52.50.

Fubon Financial Holding gained NT$0.80, or 2.5 percent, to NT$32.40.

Financial companies will be allowed to make hostile take-overs, the newspaper cited Gary Tseng (曾國烈), director-general of the Bureau of Monetary Affairs, as saying.

Taiwan Semiconductor Manu-facturing Co (台積電) led semiconductor makers higher after saying it may post record sales in the fourth quarter, beating its expectations, as analysts forecast strong cellphone demand. It rose NT$0.50, or 0.8 percent, to NT$62.50. United Microelectronics (聯電) rose NT$0.80, or 2.8 percent, to NT$29.40.

Hon Hai Precision Industry Co (鴻海精密) rose NT$1, or 0.7 percent, to NT$135.50.