Stock market rises as government seen buying stock

Taiwan stocks rose, reversing a three-month 29 percent plunge, as some investors said money managers may have been directed by the government to buy banking stocks.

The TWSE Index rose 29.55, or 0.7 percent, to 4,220.33. For the week, the index has dropped 5.9 percent. Six stocks fell for every three that rose. Trade at NT$38.03 billion (US$1.09 billion) was half this year's daily average.

"Today the government was buying some banking shares," said Cheng Yi-sheng, who helps manage NT$1.5 billion (US$43 million) in investments at Taiwan Securities Co Ltd (台証證券). People bought shares as technical analysis indicated shares were cheap, he said.

"Technically the market was due to rally," Cheng said.

The relative strength index for the TWSE index, derived by averaging out daily gains and daily losses over a 14-day period, fell to 20.57 Thursday. A value of 30 or below indicates an index is poised to rise.

State-run banks rose on government directed buying. Chang Hwa Commercial Bank (彰化銀行) rose NT$0.50, or 4.1 percent, to NT$12.65. Hua Nan Commercial Bank (華南銀行) rose NT$1, or 6.8 percent, to NT$15.80. First Com-mercial Bank (第一銀行) rose NT$0.45, or 3.2 percent, to NT$14.75.

Macronix International Ltd (旺宏電子) fell NT$0.20, or 0.7 percent, to NT$28.10. The flash memory manufacturer plans to build two semiconductor plants.

Premier Image Technology Corp (普立爾科技) fell NT$0.40, or 0.9 percent, to NT$42.40. The biggest maker of compact digital cameras wants to issue US$85 billion in bonds convertible into shares in the European market.

Taiwan Cement Corp (台灣水泥) rose NT$0.25, or 3.5 percent, to NT$7.45 after the company said it plans to sell NT$4.1 billion (US$117 million) of preference shares to institutions and its workers, as it raises funds to repay some of its NT$53 billion debt.