Taiwan stocks rose 2 percent to post their biggest daily gain in one month on Tuesday, helped by TSMC, after the government said it would allow contract chipmakers and flat-panel companies to acquire rivals in China. The main TAIEX share index finished 145.37 points higher at 7,429.98, logging its biggest percentage gain since September 1 and highest closing level in nearly a week.
"The China news was a short-term catalyst for contract chip makers and flat-panel makers' stocks, but I think gains overnight on Wall Street also prompted investors to pick up technology shares," said John Chiu, a vice president at Fuh Hwa Securities Investment Trust.
Topping the most active lists by turnover and volume were Taiwan Semiconductor Manufacturing Co Ltd (TSMC) and UMC. TSMC jumped 4.94 percent and UMC rose 3.63 percent, pushing up the semiconductor sub-index 3.3 percent to its highest closing in more than 15 months. AU Optronics, the world's No 3 flat-panel maker, advanced 2.76 percent, pushing the optoelectronics sub-index 2.11 percent higher.
Taiwanese firms have urged the government to allow them to invest in mainland China or use more advanced technologies to help cut costs and compete with rivals such as those in South Korea. The government has not given a timetable as to when it will allow such investments, said a government official. Turnover rose sharply from an over-one-month low in the previous session to T$102 billion ($3.1 billion), compared with Monday's T$76 billion.
"It's understandable that investors won't buy stocks because the main index has climbed quite a bit and is hovering around its 2009 high, but they are unlikely to sell their holdings either because data from around the world points to stronger economic fundamentals," said Chiu. Financial shares climbed 2 percent, with Cathay Financial, the island's top listed financial holding firm, rising 1.71 percent.
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