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Shares rally on Hsieh's comments

Stocks gained, snapping a four-day drop, after the ruling party's presidential candidate proposed introducing a new policy that would welcome Chinese investors and ease investment limits. Hon Hai Precision Industry Co (鴻海精密) paced the gains.

"The new China policy from the ruling party would be a plus for stocks of Taiwan companies already invested heavily there," said Tracy Chen (陳翠芝), who helps manage US$2.3 billion at PCA Securities Investment Trust Co.(保誠投信) in Taipei.

Mediatek Inc (聯發科技) paced declines among exporters on concern the US subprime mortgage turmoil will hurt corporate earnings and consumer demand in the world's largest economy.

The TAIEX index added 35.51, or 0.4 percent, to close at 9,308.60, snapping the 5.5 percent drop in the previous four trading days. About three stocks slipped for every two that gained yesterday. November futures rose 0.5 percent to 9,275.

Hon Hai, which makes Apple Inc's iPod in China, climbed NT$10, or 4.4 percent, to NT$235 (US$7.25). Uni-President Enterprises Corp (統一企業), the nation's biggest food company which supplies instant noodles to China, rose NT$1, or 2.3 percent, to NT$45.15.

SUPPORT

Democratic Progressive Party presidential candidate Frank Hsieh (謝長廷) said that he supported easing China investment restrictions following a visit to the Taiwan Stock Exchange yesterday. Hsieh said he was also in favor of allowing Chinese investors to invest in Taiwan.

Mediatek Inc, the world's largest supplier of chips for DVD players, slid NT$41, or 6.9 percent, to NT$552. Nanya Technology Corp (南亞科技), Taiwan's second-largest memory chipmaker slipped 1 percent to NT$20.20.

DEALS

The Wall Street Journal reported on Friday that Merrill Lynch and Co may have struck deals with hedge funds in an attempt to conceal losses on subprime investments. Two weeks ago, Merrill revealed a US$7.9 billion writedown linked to mortgage investments.

It also reported that Citigroup Inc, the largest bank in the US, may have to post between US$8 billion and US$11 billion in additional writedowns on mortgage-related securities.

DETERIORATION

"Signs of deterioration in the US economy are causing grief on corporate earnings outlooks," said Sam Hsieh, who helps oversee US$2.7 billion at FuHwa Investment Trust Co (復華投信). "Investor confidence on US demand is again weakened."

The US is Taiwan's largest export market after China.

Elsewhere, China Steel Corp (中鋼), the nation's largest steelmaker, rose 2.1 percent to NT$44.90. China Steel said sales last month rose 8.2 percent from a year earlier to NT$18.4 billion.
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