Taiwan's key stock index rallied to its highest in seven weeks, as chip foundries such as Taiwan Semiconductor Manufacturing Co rallied amid hopes rising product prices and increasing demand will bolster earnings.
The benchmark TAIEX index jumped 115.60, or 1.4 percent, to 8273.33, a level not seen since July 12. Winners and losers were evenly matched. Trading soared to a two-month high, rising 42 percent to NT$192.9 billion (US$6.1 billion) from the daily average of the last three months.
"The fundamentals of foundries look very positive," said Yu Rayming, who manages NT$2 billion for Core Pacific Securities Investment Trust Co. "They're the island's most competitive industry on the global stage." Yu said TSMC and United Microelectronics Corp, TSMC's closest rival, make up almost one-fifth of his portfolio, while they make up about a sixth of the TAIEX's value.
Chip foundries, which produce chips to customer designs, rose and were the most value by value as better-than-expected demand is boosting prices, some analysts said.
TSMC, the world's No. 1 foundry, jumped NT$4, or 3 percent, to NT$139. It said last week it's considering lifting prices of selected products, without giving specific numbers. TSMC is expected to earn NT$5.50 -- NT$6 a share in 2000, compared with NT$3.50 estimated this year, analysts said.
UMC rose NT$3, or 3.1 percent, to NT$83.50. UMC has raised some products' prices by 10 percent to 15 percent in this quarter and may raise them further, they said.
Computer memory chipmakers fell as two big shareholders of Mosel Vitelic Inc told regulators yesterday of their plans to sell a combined 5.1 million shares, raising concern their recent rally isn't justified by earnings potential.