TAIEX rises on forecast

Taiwan stocks rose, led by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), after Merrill Lynch & Co said demand for semiconductors will pick up from the third quarter, suggesting the worst may be over for the industry.

The TAIEX surged 135.67, or 3.1 percent, to 4490.19, its intra-day high. The index is up 11 percent since July 24 in New Taiwan-dollar terms. Within the index, 378 stocks rose and 75 fell. Trade at NT$63.32 billion (US$1.8 billion) was 31 percent higher than yesterday's NT$48.38 billion.

"There are a lot of reports that the foundry industry deserves a buy now," said Michael Ding (丁予嘉), chief investment officer at International Investment Trust Ltd (國際投信), which manages NT$88.6 billion (US$2.55 billion) in investments. "Long term of course it's going to be a good buy. The foreign investors in Taiwan think the foundry guys are at the bottom now." Merrill Lynch analyst Dan Heyler yesterday upgraded his recommendation on TSMC to "buy" from "accumulate," saying that demand is showing signs of bottoming. Merrill Lynch has an investment banking relationship with TSMC.

TSMC rose NT$2, or 2.9 percent, to NT$70.50 after Merrill Lynch said demand for made-to-order chips may pick up gradually after the third-quarter. TSMC's American depositary receipts yesterday rose 4.6 percent to US$17.05.

United Microelectronics Corp (UMC, 聯電), TSMC's biggest rival, rose NT$1.10, or 2.8 percent, to NT$40.20. UMC's ADRs rose 3.2 percent to NT$8.71. Heyler also raised his recommendation on UMC shares to "buy"' from "accumulate." Asustek Computer Inc (華碩電腦) rose NT$4, or 2.7 percent, to NT$155. Goldman Sachs Group Inc said Intel Corp has placed more orders for motherboards and that the company would win an order from Dell Computer Corp.

Bank SinoPac (華信銀行) increased NT$0.10, or 0.8 percent, to NT$12.60. Taiwan's most-popular bank stock with foreign investors canceled plans to sell US$127 million of shares to overseas investors for the first time after a fall in its stock price.

Compal Electronics Inc (仁寶電腦) rose NT$2.50, or 6.8 percent, to NT$39.30. The notebook computer maker said yesterday its net income in the second quarter rose almost a third to NT$2.1 billion as the New Tawian dollar's 5 percent fall against the US dollar boosted profits by NT$580 million.

E.Sun Commercial Bank (玉山銀行) rose NT$0.15, or 1.5 percent, to NT$10. The bank said yesterday it isn't interested in merging with rival Cathay United Bank (匯通銀行) and has set up a task-force to examine its options amid a government drive to make lenders more efficient.

Via Technologies Inc (威盛電子) rose NT$7, or 3.2 percent, to NT$225. Taiwan's biggest chipset designer said yesterday its July sales rose 25 percent from June to NT$2.53 billion on improved demand for its chipsets.