TAIEX has best day in two months

Taiwan's key stock index had its biggest gain in two months as investors said government funds bought shares in an effort to boost one of the worst-performing markets in the world in the last three months. Chunghwa Telecom Co Ltd (中華航空) led the gains.

The TAIEX gained 164.02, or 4 percent, to 4300.41, its biggest gain in percentage terms since May 23. Five stocks rose for every one that fell. The key index has fallen 26 percent in the last three months, making it the world's second-worst performer in US-dollar terms.

"The government has had to buy to try and give investors confidence," said Simon Chao, who manages NT$700 million (US$20 million) in Taiwan stocks at President Investment Corp (統一投資).

Four government funds this month said they will 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 following stocks made significant gains or losses.

Chunghwa Telecom increased NT$1.70, or 2.9 percent, to NT$45.30, after falling as much as 1.4 percent. The government has about a 95 percent stake in the country's biggest phone company. Government funds usually buy stocks in companies in which the government has a large stake.

Government-controlled banks rose on buying by government funds. Government funds usually try to prop up shares by buying stock in companies which the government is a major shareholder.

First Commercial Bank (第一銀行) rose NT$0.45, or 3.2 percent, to NT$14.60. International Commercial Bank of China (中國國際商銀) gained NT$0.70, or 4.6 percent, to NT$15.90.

Chang Hwa Bank (彰化銀行) rose NT$0.45, or 3.7 percent, to NT$12.55.

Memory chipmakers rose after falling to a one-year low earlier as some investors bought the shares on expectations prices are cheap. The spot price for the 64-megabit dynamic random access memory chip is at US$0.87, down from almost US$9 a year ago.

Mosel Vitelic Inc (茂矽電子) rose NT$0.45, or 3.8 percent, to NT$12.20, after earlier falling to a 52-week low of NT$11.25. Nanya Technology Corp (南亞科技) rose NT$0.20, or 1.5 percent, to NT$13.95, after earlier falling to a 52-week low of NT$12.95. Winbond Electronics Corp (華邦電子) rose NT$1.20, or 6.5 percent, to NT$19.60, after earlier falling to a 52-week low of NT$17.70.

Shares of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) rose NT$1.50, or 2.5 percent, to NT$60.50.

Lucas Ward, an analyst at JP Morgan Securities Inc in San Francisco, expects the biggest made-to-order chipmaker's utilization, revenue and earnings for the third quarter to rise from the second quarter.

After the market closed, TSMC said its second-quarter profit fell 98 percent to NT$312 million, beating analysts' expectations. The company also said outlook for the third quarter will improve.

Yageo Corp (國巨) rose NT$1.60, or 6.7 percent, to NT$25.50, bringing its two-day gain to 12 percent. The biggest maker of parts that control the flow of electricity in computer and mobile-phone circuits said yesterday after the market closed that second-quarter profit rose 25 percent to NT$1 billion, boosted by more sales.