TAIEX share prices rise on government fund buying, chipmakers lead gainers

Taiwan's key stock index posted its biggest gain in a month as some investors said government funds bought Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and other large shares as the index approached an eight-year low.

The TAIEX rose 95.62, or 2.4 percent, to 4136.39, its biggest gain in percentage terms since June 29. Five stocks rose for every two that fell. The TWSE index is the world's second-worst performer in US dollar terms in the last three months, after losing almost a third of its value.

Government funds bought stocks in an effort to restore investor confidence, said Cheng Yi-sheng, who helps manage NT$1.5 billion (US$43 million) in investments at Taiwan Securities Ltd (台証證券).

The index fell 0.4 percent at the open before advancing.

"The government was buying because when the market opened, there was NT$2 billion to NT$3 billion in margin calls which would have sunk the index below 4,000," said Cheng, referring to brokers' requests for customers to pay back loans they'd taken out to purchase stocks.

Four government funds this month said they'll invest NT$100 billion in stocks by year-end. The government doesn't comment on whether its funds are purchasing stocks or whether it has directed local money managers to buy shares.

The total value of trade was NT$45.15 billion, up from NT$36.73 billion yesterday, though still below this year's daily average of NT$76.39 billion.

TSMC rose NT$1.50, or 2.6 percent, to NT$59. The biggest made-to-order chipmaker is expected to report tomorrow its second-quarter net income dropped 99 percent, though some investors are saying earnings may improve in the third-quarter with better demand for chips. United Microelectronics Corp (UMC, 聯電), TSMC's chief rival, rose NT$0.90, or 2.6 percent, to NT$36.10.

China Steel Corp (中鋼) rose NT$0.70, or 5.8 percent, to NT$12.80. Taiwan's biggest steelmaker, asked Japanese companies including NKK Corp and Kawasaki Steel Corp to supply slab steel under long-term contracts, Nikkei English News said, citing unidentified sources. During a meeting with the Japanese companies, China Steel Chairman Kuo Yen-tu (郭炎土) also sought technology support in a blast-furnace steel mill project, said the report.

MediaTek Inc (聯發科技) rose NT$22, or 7 percent, to NT$338, bringing its three-day gain to 20 percent. The company, a designer and manufacturer of CD-ROMs and DVD-ROMs, has the biggest market share of CD-ROM chipsets and is moving into the fast growing CD re-writable market, JP Morgan said. JP Morgan expects the stock to rise to NT$478 within 12 months.

Silicon Integrated Systems Co (矽統科技) fell NT$1.60, or 5.4 percent, to NT$28.20, bringing its three-day decline to 19 percent, on concerns banks may sell the company's shares pledged as collateral, putting pressure on its price.