Hua Nan, CDIB leaders in biggest gains in a month

Taiwan's key stock index had its biggest gain in a month, led by Hua Nan Commercial Bank (華南銀行), on speculation the government-controlled lender wants to set up a financial holding company and is seeking a foreign partner.

Hua Nan Bank's spokesman couldn't be reached for comment.

The TWSE Index surged 140.31, or 3.2 percent, to 4508.69, its biggest one-day gain in percentage terms since July 26.

Within the index, 431 stocks rose and 44 fell. Trade at NT$65.22 billion (US$1.89 billion) was 79 percent higher than yesterday's NT$36.46 billion.

"The only alternative for the big banks to improve their asset quality and increase their earnings is to set up a financial holding company and seek a foreign partner," said Nora Hou, a banking analyst at CLSA Global Emerging Markets in Taiwan.

Hua Nan Commercial Bank rose NT$1.10, or 6.6 percent, to NT$17.90 on speculation the bank may set up a financial holding company and get a foreign bank to invest in its business.

Other lenders also rose. China Development Industrial Bank (中華開發銀行), Taiwan's biggest lender by market value, rose NT$1.30, or 5.9 percent, to NT$23.40.

First Commercial Bank (第一銀行), Taiwan's biggest listed lender by assets, rose NT$1.20, or 6.9 percent, to NT$18.50. International Commercial Bank of China (中國商銀), Taiwan's fifth-biggest listed bank by assets, rose NT$1.20, or 6.6 percent, to NT$19.40.

Memory chipmakers slid after the spot price for their main product fell to less than a tenth of what it was a year ago, according to DRAM Exchange, a market place for memory chips.

The spot price for the 64-megabit DRAM chip is at US$0.77, down from about US$9 a year ago.

Mosel Vitelic Inc (茂矽電子) fell US$0.15, or 1.3 percent, to NT$11.25. Nanya Technology Corp (南亞科技) fell US$0.10, or 0.7 percent, to NT$15.30.

Winbond Electronics Corp (華邦電子) fell NT$1.30, or 6.4 percent, to NT$19.

Mobile phone makers rose on hopes demand for handsets will increase after Texas Instruments Inc said demand for its telecommunication semiconductor chips was rising.

Acer Communications & Multimedia Inc (明電) rose NT$1.20, or 3.6 percent, to NT$34.50. GVC Corp (致福) rose US$0.90, or 6.8 percent, to NT$14.10.

Cathay Life Insurance Ltd (國泰人壽) rose NT$2.40, or 7 percent, to NT$36.80.

Taiwan's biggest life insurer began buying back 60 million shares, or 1.1 percent of its outstanding stock, at between NT$25 and NT$40 today. The buy back is scheduled to be complete on Oct. 10.

Silicon Integrated Systems Corp (矽統科技) rose NT$1.80, or 5.5 percent, to NT$34.70 after the chipset seller said in an e-mail to reporters that its Pentium 4 based chipset will be mass produced next month.

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) rose NT$1.50, or 2.4 percent, to NT$64.50. The biggest made-to-order chipmaker's American depositary receipts rose US$0.63, or 5.1 percent, to US$12.88 yesterday.