TAIEX rallies after long losing streak

Taiwanese stocks rose yesterday, with the nation's key index recovering from its longest losing streak in a decade. Hon Hai Precision Industry Co (鴻海精密) paced gains as some investors bet the benchmark's 4.6 percent drop the past 11 days was excessive.

"Investors may have gone too far in selling shares," said Liu Juming, a Taipei-based fund manager at Ta Chong Investment Trust Corp (大眾投信), which manages US$1.1 billion in assets.

"People love to bottom-fish" when the market falls, Liu said.

The TAIEX index gained 47.71, or 0.8 percent, to 6,206.65 at the 1:30pm close in Taipei. About three stocks gained for every two that fell. Futures due in September climbed 0.8 percent to 6,215.

The benchmark on Aug. 19 completed its longest losing streak since a 12-day decline ended May 27, 1995, on concern rising oil costs would slow demand for the nation's exports. The index dropped 3 percent last week.

Goldman Sachs Group Inc raised its oil forecast for next year to US$68 a barrel and said crude will stay around US$60 for several years.

Hon Hai, Taiwan's largest electronics company by sales, climbed NT$4, or 2.3 percent, to NT$176.

The world's largest supplier of made-to-order computer chips, Taiwan Semiconductor Manufacturing Co (台積電), gained NT$0.40, or 0.8 percent, to NT$52.

The index's relative strength dropped to 32.8 on Friday, a level not seen since April 22. A reading between 30 and 20 indicates to some investors that stocks are poised to rise.

Elsewhere, Asustek Computer Inc (華碩電腦), the nation's largest maker of boards that connect the chips in personal computers, rose NT$0.80, or 1 percent, to NT$83.50.

Asustek said it hired Flextronics International Ltd to make motherboards.