Taiwan's key stock index posted its biggest gain in two months on speculation government funds bought stocks such as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to boost confidence and improve their quarterly performance.
The TWSE Index rose 131.75, or 3.8 percent, to 3625.53, its biggest percentage gain since July. 26. Within the index, 385 stocks rose and 81 fell. The total value of trade today was NT$60.4 billion (US$1.8 billion), below the year-to-date average of NT$69.5 billion.
``Every quarter the government funds have to market their holdings, and if the index drops, their fund performance isn't good,'' said Cheng Yi-sheng, who helps manage NT$1.5 billion (US$43 million) in investments at Taiwan Securities Co (台証證券), who said government funds are buying shares.
There are four government funds that control NT$1.5 trillion (US$43 billion) in investments. The four government funds are the Labor Retirement Fund, the Postal Savings Fund, the Civil Servant Pension Fund and the Labor Insurance Fund.
In addition, the government has a US$500 billion fund to support the stock market, though it doesn't comment on its activities. The index fell as much as 2.4 percent today.
Chipmakers rose after traders said government funds bought the largest shares in the market to boost the index and improve investor sentiment. TSMC is the biggest company by market value on the index and UMC is the third-biggest.
TSMC, the biggest made-to-order chipmaker, rose NT$1.10, or 2.3 percent, to NT$48.50, ending a seven-day, 26 percent drop. United Microelectronics Corp (UMC, 聯電), the second-biggest made-to-order chipmaker, rose NT$0.9, or 3.4 percent, to NT$27.30, ending a 12-day, 34 percent slide.
Electronic stocks rose after the relative strength measure of the TWSE Electronics Index fell to 14.9 yesterday. ``I'm accumulating now as I think the index will rebound,'' said Simon Chao, who manages NT$800 million (US$23 million) in Taiwan stocks at President Investment Trust Corp (統一投信) in Taipei. Chao is buying shares in computer motherboard maker Gigabyte Technology Ltd (技嘉科技) and chipset designer Via Technologies Inc (威盛電子).
Asustek Computer Inc (華碩電腦), Taiwan's biggest motherboard maker, rose NT$5.50, or 5.8 percent, to NT$100.50.
Gigabyte Technology rose NT$4, or 6.8 percent, to NT$62.50. Mediatek Inc (聯發科技), the second-biggest chipset designer in Taiwan by market value, rose NT$16, or 6.7 percent, to NT$254.
Quanta Computer Inc (廣達電腦), Taiwan's biggest notebook computer maker, rose NT$4, or 6.6 percent, to NT$64.50. Via Technologies, Taiwan's biggest chipset designer by market value, rose NT$4.50, or 5.3 percent, to NT$89. Yageo Corp (國巨), the biggest maker of parts that control the flow of electricity in computer and mobile phone circuits, rose NT$0.7, or 4 percent, to NT$19.10.
Acer Communications & Multimedia Inc (明電) rose NT$1.80, or 6.8 percent, to NT$28.40 after a Chinese language newspaper reported the mobile telephone and flat screen maker plans to begin repurchasing 20 million shares today and spend as much as NT$980 million.
Hon Hai Precision Industry Co (鴻海精密) rose NT$7, or 6.9 percent, to NT$109. Taiwan's sixth-biggest company by market value, said it won't complete a US$400 million overseas share sale this quarter because of the plunge in global equity markets.
The company, which makes everything in a computer except chips, will wait until ``markets recover'' before selling shares, Hon Hai spokesman Edmund Ding (丁憲文) said. Hon Hai earlier planned to sell the shares by August.
Mosel Vitelic Inc (茂矽電子) rose NT$0.35, or 5.3 percent, to NT$7. The memory chipmaker denied a report that it asked the government for financial help to support Taiwan's semiconductor industry.
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