TAIEX posts gain as investors await government action

The TAIEX rose for the fifth day in six, led by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) on expectations the government will help support the market before the Dec. 1 legislative election.

The government "will interfere in the market," said Simon Chao, who manages NT$800 million (US$23 million) in Taiwan equities at President Investment Trust Corp (統一投信) in Taipei. "If the index rebounds, it's good for them at the election."

The TAIEX advanced 77.57, or 1.7 percent, to 4,533.37, after falling as much as 1.2 percent. Within the index, 257 stocks rose and 229 fell. The total value of trade today was NT$83.8 billion (US$2.4 billion), down 31 percent from yesterday.

There are four government funds that control NT$1.5 trillion in investments: the Labor Retirement Fund, the Postal Savings Fund, the Civil Servant Pension Fund and the Labor Insurance Fund. The government also has a NT$500 billion fund to support the stock market, though it doesn't comment on that fund's trading activities.

Government funds may be buying the largest shares by market value in order to boost the index. Chunghwa Telecom Co (中華電信), the biggest telephone company, rose NT$0.70, or 1.5 percent, to NT$48.50.

Formosa Plastics Corp (台塑), part of Taiwan's biggest industrial group, rose NT$1.30, or 4.1 percent, to NT$33. Nan Ya Plastic Corp (南亞塑膠), another unit of Taiwan's biggest industrial group the Formosa Group (台塑集團), rose NT$0.90, or 4 percent, to NT$23.40.

Made-to-order chipmakers gained, erasing earlier declines, on expectations their business may improve this quarter.

"Investors should take the opportunity to buy TSMC shares," said Andrew Lu (陸行之), head of regional semiconductor research at Salomon Smith Barney Taiwan Ltd.

TSMC, the biggest made-to-order chipmaker, rose NT$1, or 1.3 percent, to NT$75.50, after earlier falling as much 3.4 percent.