Wed, Nov 03, 2004 - Page 11 News List

Oil pullback sparks rally in technology bluechips

AP , TAIPEI

Shares ended higher yesterday as a pullback in global oil prices sparked a rally in technology bluechip shares, analysts said.

The TAIEX finished 103.44 points, or 1.8 percent, higher at 5,759.61 in trading valued at NT$56.86 billion (US$1.69 billion).

Advancers well outnumbered decliners 521 to 138, while 125 issues ended the day unchanged.

"A retreat in oil prices to around US$50 a barrel overnight attracted funds to the tech sector, and in Taiwan only the tech sector has the capitalization to move the benchmark index this dramatically," said Harvey Chang, an analyst at United Investment Securities Trust (聯合投信).

Chang said lower oil prices relieve the pressure on central banks to increase interest rates, and that in turn keeps down financing costs for technology firms, which tend to take out large loans to finance plant expansions.

Taiwan Semiconductor Manu-facturing Co (台積電), the world's largest contract chipmaker, rose 2.5 percent to NT$45, while global No. 2 United Microelectronics Corp (聯電) jumped 2.5 percent to NT$20.30.

Chang said the foundry giants are favorites among overseas investors, and their appearance among the most active shares yesterday is an indication overseas funds are flowing into Taiwan before Morgan Stanley Capital International upgrades Taiwan in its global indexes on Nov. 30.

AU Optronics Corp (友達光電) rose 6.3 percent to NT$35.30 on bargain hunting. It had plunged by 21 percent on Monday to NT$33.20 -- the lowest close so far this year -- from the high of NT$42 a month ago due to concerns over excess inventory and falling panel prices.

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