TAIEX closes higher as foreign investors pursue Asian stocks

Shares ended higher yesterday as foreign investors increased their holdings in financial stocks, analysts said.

The TAIEX finished 70.84 points, or 1.2 percent, higher at 5,846.83. Dealings were valued at NT$79.27 billion (US$2.33 billion).

"Foreign investors are the main drivers today, upping their Asian portfolios with financial and old-industry stocks after returning from summer vacations," said Harvey Chang, an analyst at United Securities Investment Trust (聯合投信).

Chang said financial shares, in particular, rose as overseas investors added to their holdings ahead of changes to Taiwan's weighting in Morgan Stanley Capital International's indexes.

Financial shares also advanced on speculation the government will encourage bank mergers to help them become more competitive. Four of the 10 most actively traded shares yesterday were in financial companies, including China Development Financial Holding Corp (中華開發金控), up 4 percent to NT$15.6, and First Financial Holding Co (第一金控), up 3.8 percent to NT$24.8.

Formosa Plastics Corp (台塑) climbed 1.9 percent to NT$53.5 and the Formosa Plastics Group's Nan Ya Plastics (南亞) gained 2.8 percent to NT$48.

Chip designer MediaTek Inc (聯發科技) jump-started the day's session after posting August revenue of NT$4.11 billion, 14 percent higher than in August last year. MediaTek shares ended 5.2 percent higher at NT$242.

"MediaTek's August sales were impressive, indicating a stronger-than-expected demand ahead of the year-end holiday season," said said Jerry Chen, a fund manager at First Global Investment Trust Co (金鼎投信).