Banks rise, chipmakers fall

Taiwan banking stocks rose, led by Hua Nan Commercial Bank (華南銀行), after the government proposed a 50 percent cut on the capital gains tax from property sales for two years.

Asustek Computer Inc (華碩電腦) fell, leaving the market mixed, after profit at the computer motherboard maker slid 14 percent in the second quarter as sales and margins declined.

Asustek's "sales and earnings may fall further because margins are contracting," 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). Cheng sold all of his Asustek shares in the past few days.

The TWSE Index fell 4.83, or 0.1 percent, to 4,503.86, after rising as much as 1.5 percent and falling as much as 0.9 percent.

Within the index, 260 stocks rose and 182 fell. The total value of trade today was NT$62.97 billion (US$1.82 billion), 13 percent less than the year to date average of NT$72.57 billion.

Asustek Computer fell NT$2.50, or 1.9 percent, to NT$130.50. Net income dropped 14 percent to NT$2.92 billion (US$84.4 million) a year ago.

Sales in the second quarter fell 7 percent to NT$16 billion. Asustek Spokesman David Chang said gross margins in the first-half of this year fell to 24 percent from 25 percent a year ago.

Banks and insurers rose after the government proposed the capital gains on land sales be cut in half for two years. They rose 1.8 percent as a group, completing a 12 percent rally this week.

"Banks will benefit as they will be more willing to sell land," said Sophia Cheng, the banking analyst at Merrill Lynch Taiwan Ltd.

"They have huge land banks and can take the money and write off their non-performing loans."

Cathay Life Insurance Ltd (國泰人壽), which has more than 90 commercial buildings and 90 big plots of land, rose NT$2.50, or 6.8 percent, to NT$39.30. Hua Nan Commercial Bank, the second-biggest listed lender by assets, gained 60 cents, or 3.4 percent, to NT$18.50. Chang Hwa Commercial Bank (彰化銀行), the third-biggest listed bank by assets, rose 30 cents, or 2.1 percent, to NT$14.60.

Chipmakers dropped after the widely watched Philadelphia Stock Exchange Semiconductor Index, a price-weighted index of 16 companies that are involved in the design and sale of chips, fell 3.3 percent yesterday.

Taiwan Semiconductor manufacturing Co (TSMC, 台積電), the biggest made-to-order chipmaker, fell NT$1.50, or 2.3 percent, to NT$63. Its American depositary receipts fell 2.6 percent to US$12.55 yesterday. United Microelectronics Corp (UMC, 聯電), the second-biggest made-to-order chipmaker, fell 10 cents, or 0.3 percent, to NT$38.90. UMC's ADRs fell 0.1 percent to US$6.98.