TSMC leads TAIEX gains

Taiwan's key stock index rose for a fifth day on expectations the central bank will follow the US' lead and reduce interest rates as early as today. Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) led gains.

The TAIEX rose 75.23, or 1.8 percent, to 4,158.15, after rising as much as 2.3 percent. Within the index, 329 stocks rose and 142 fell. TSMC accounted for a fifth of the index's gains.

The Central Bank of China trimmed its rediscount rate, charged to commercial lenders for 10 day loans, to a record 2.25 percent from 2.5 percent yesterday.

A rate cut would be "more geared to shore up sentiment and stock market valuations as banks show little inclination to lend money," said Michael Spencer, chief economist for Asia at Deutsche Bank AG.

Taiwan's Cabinet abolished a US$50 million limit on investments in China, further boosting investor sentiment on hopes tense relations with China may be reduced.

The total value of trade was NT$75.23 billion (US$2.2 billion), 16 percent higher than the average daily turnover this year of NT$66.9 billion. The index is the sixth best performing in the world in the last month, up 16 percent in US-dollar terms.

TSMC rose NT$1.50, or 2.3 percent, to NT$67, bringing its gain since its six-month low on Oct. 3 to 52 percent. The biggest made-to-order chipmaker said its board of directors approved the sale of NT$15 billion (US$435 million) of bonds to domestic investors. Its rival United Microelectronics Corp (UMC, 聯電), the second-biggest made-to-order chipmaker, rose NT$2.10, or 6.5 percent, to NT$34.30, up 47 percent since its six-month low on Oct. 3.

Banks gained on hopes another interest rate cut by the nation's central bank will help companies meet their debt obligations and lessen their non-performing loans, which rose to NT$1.66 trillion (US$48 billion), or 7.8 percent of outstanding credits, in September, the central bank said.

First Commercial Bank (第一銀行), the biggest listed lender by assets, rose NT$0.30, or 1.7 percent, to NT$18.40. Hua Nan Commercial Bank (華南銀行), the second-biggest listed lender by assets, rose NT$0.20, or 1.1 percent, to NT$17.70.

Changhwa Commercial Bank (彰化銀行), the third-biggest listed lender, rose NT$20, or 1.6 percent, to NT$12.75.

Transport stocks advanced on expectations direct transport links between China and Taiwan may result once both join the WTO. China Airlines Co (華航), the biggest airline in the country, rose NT$0.15, or 1.3 percent, to NT$11.75. Eva Airways Corp (長榮航空), Taiwan's second-biggest airline, rose NT$0.15, or 2.3 percent, to NT$6.65.

Evergreen Marine Corp (長榮海運), Taiwan's biggest shipping company, rose NT$0.45, or 4.1 percent, to NT$11.55. Wan Hai Lines Ltd (萬海航運), the second-biggest shipper in the nation by market value, rose NT$0.05, or 0.4 percent, to NT$11.60.

Hon Hai Precision Industry Co (鴻海精密) rose NT$5.50, or 4 percent, to NT$143.50. The maker of everything in a computer except chips gained after a Chinese-language newspaper reported company Chairman Kuo Tai-ming (郭台銘) as saying the company's sales will rise 60 percent to more than NT$150 billion (US$4.3 billion) this year from last year. Revenue will be boosted by a large order from a major Japanese company and Hon Hai's expansion into China, Kuo said.