Taiwan stocks shot up 2.33 percent on Monday as major LCD makers such as AU and Chi Mie led a rebound from a 14-month low, following gains in US markets and solid quarterly profits.
The TAIEX share index ended up 131.33 points at 5,764.30 led by a 3.25 percent rally in the electronics sub-index.
Turnover rose to T$73.18 billion ($2.18 billion) from T$68.3 billion in the last session. "It looks like investors' confidence has recovered after the recent fall," said Kevin Line, a fund manager at Chinking Investment Trust.
The day's rally was the largest one-day percentage gain since a 2.69 percent surge on August 26, 2004 in a catch-up rally to US stocks.
"But in the longer term, we have to watch closely on whether demand in the US will weaken," Lin said, referring to the impact of high oil prices and rising global interest rates on demand for electronics products.
Most Taiwan makers of electronics products and parts count top US computer vendors as clients. If demand from the US slows, Taiwan will be hurt.
The electronics sub-index jumped percent after US Nasdaq, a key gauge for local tech shares, jumped 1.26 percent on Friday on better-than-expected US third-quarter economic growth.
Financials, second only to techs in Taiwan's weighting, rose 1.7 percent.
Chi Mie Optoelectronics Corp, Taiwan's second-largest maker of liquid crystal displays (LCDs) for computers and flat-screen TVs, surged the daily 7 percent after reporting a better-than-expected third-quarter profit.
Buying spread to other LCD-related stocks. AU Optronics Corp, the world's number-three display maker and the market's second most active issue by volume, gained 6.67 percent.
AU posted a 41 percent jump in quarterly profit last week and said it saw only a small oversupply of LCDs in 2006. Optimal Technology Corp, which makes polarises film to enhance picture quality in LCD screens, also went limit-up.
Second-tier LCD maker HannStar Display Corp finished limit-up after a local media report said the firm had secured orders of 8 million panels for flat-screen monitors from overseas clients.
Bargain hunters piled up with contract chipmaker United Microelectronics Corp (UMC) rising 6.27 percent. Its share price had fallen sharply since on Thursday, when it posted an 80 percent drop in quarterly profit.
UMC was the market's most actively traded issue by both volume and turnover. China Motor Corp gained 1.46 percent on a local media report that the company plans to join hands with DaimlerChrysler to set up a 160 million euro auto company in China to beef up its presence on the mainland.
Mediatek Inc, the world's largest provider of DVD chips, was also limit-up after reporting an 11.3 percent profit rise for the first 9 months of the year.
Quanta Computer Inc, the world's top contracts maker of laptop computers, rose 4.04 percent. Minutes after the close of trade, the firm posted a 10.7 percent rise in third-quarter profit.
Hon Hai Precision Industry Co, the island's largest electronics parts maker, edged up 1.05 percent ahead of its quarterly profit later on Monday.
On a sour note, Taiwan Green Point Enterprises Co Ltd and rival Merry Electronics Co Ltd Topped the list of biggest losers.
Futon Securities attributed the weakness to worse-than-expected quarterly profit from Taiwan Green Point, a supplier of mobile phone components. Both stocks slumped the daily 7 percent limit.
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