TAIEX up as banks rise on merger law

Taiwan stocks rose, paced by China Development Industrial Bank (中華開發工銀), on expectations the island's parliament will pass a law today that will help spur mergers among lenders.

The TWSE Index rose 79.95, or 1.6 percent, to 5065.06, its biggest gain since May 23. Five stocks rose for every one that fell. Trade at NT$38.5 billion (US$1.1 billion) was less than half this year's daily average of NT$87.6 billion.

Taiwan's lawmakers may pass the Financial Holding Company Law (金融控股公司法) today, paving the way for more mergers and takeovers among the more than 300 lenders on the island, said Jean Chiu, chief of planning and regulation at the Bureau of Monetary Affairs.

"If the financial holding company law is passed then that will be something very positive as that will get financial consolidation rolling," said Sherry Lin, an analyst at Credit Suisse First Boston in Hong Kong.

The Ministry of Finance yesterday lifted price limits on share buybacks as part of the government's effort to stem a slide in the Taiwan stock market and boost trading volumes.

Banks rose. The Financial Holding Company Act will let Taiwan's banks, insurers and brokerages cluster under a single corporate structure and should accelerate changes in the industry, where more than 50 banks, more than 100 securities companies and more than 300 credit cooperatives currently jostle for business, analysts said.

China Development Industrial Bank, the biggest lender by market value in Taiwan, rose NT$0.70, or 2.6 percent, to NT$27.80. United World Chinese Commercial Bank (世華商銀), the third biggest, rose NT$0.20, or 0.9 percent, to NT$23. International Commercial Bank of China (中國國際商銀), the fourth biggest, rose NT$0.40, or 1.7 percent, to NT$23.70.

Gigabyte Technology Ltd (技嘉科技) rose NT$2, or 2.3 percent, to NT$90.50. Taiwan's second-largest computer circuit board maker said distributors and systems integrator companies have been placing more orders since last week.

Mosel Vitelic Inc (台灣茂矽) rose NT$1.20, or 6.7 percent, to NT$19. Taiwan's fifth-largest chipmaker predicts memory chip prices have bottomed out and expects demand to rise from July.

Mustek Systems Inc. (鴻友科技) fell NT$0.05, or 0.8 percent, to NT$5.95. Mustek, which makes computer scanners and digital versatile disc players, said it expects to more than double DVD production by year-end as prices fall.