Formosa Plastics gains on hope for direct links

Taiwan stocks rose for the first day in five, led by Formosa Plastics Corp (台塑) and other companies with business in China, on optimism the nation may discuss establishing direct trade and transport links with China.

The TWSE Index added 98.46, or 1.8 percent, to 5541.64 as about two stocks rose for every one that fell. The total value of trade was NT$66.2 billion ($1.9 billion), more than two-fifths below the six-month daily average of NT$122.8 billion.

Formosa Plastics, the flagship of Taiwan's largest industrial group, rose NT$2.30, or 5.8 percent, to NT$41.70, while China Airlines Co (華航) rose NT$0.90, or 6.4 percent, to NT$15 after a Chinese-language newspaper reported yesterday that China's head of the Taiwan Affairs Council, Chen Yunlin (陳雲林), welcomed discussions with Taiwan businessmen about establishing cross-strait direct links.

``The Formosa Group would benefit greatly from direct links,'' said Cecilia Liu, an analyst at CLSA Ltd (里昂證券) in Taiwan. ``It would be able to ship raw materials from Taiwan directly to its plants in China.''

Mosel Vitelic Inc (茂矽), Taiwan's third-largest computer-memory-chip maker fell NT$0.80, or 6.7 percent, to NT$11.10 before an announcement by the stock exchange to halt margin trading in companies whose net worth per share last year fell below their nominal value of NT$10 each.

Procomp Informatics Co (博達) rose NT$1.70, or 3.7 percent, to NT$47.60. The maker of communications chips said it plans to sell as many as 50 million shares to overseas investors to raise funds.

TaipeiBank (北銀) rose NT$1.50, or 6.7 percent, to NT$24 after a Chinese-language newspaper reported yesterday that the Taipei City Government-controlled lender invited bids for a stake in itself from as many as five financial holding companies.

The bank asked the potential buyers, including Fubon Financial Holding Co (富邦金控), Cathay Financial Holding Co (國泰金控) and Chinatrust Financial Holding Co (中國信託金控), to submit proposals by mid-June, the report said. The lender will later seek price bids from companies that make the short list, it added.