Taiwan stocks rose 1.30 percent to a 2-1/2-week closing high on Monday, as investors hunted for technology bargains such as chip designer Mediatek Inc and smartphone maker HTC. The main TAIEX share index gained 109.33 points to end at 8,506.28, with the heavily weighted electronics sub-index up 1.49 percent, and the financial sector 0.06 percent higher.
The index gained about 9 percent for the year, making it one of Asia's worst laggards over the period, with investors worried about the economy's high reliance on exports to the US as the United States grapples with its subprime credit crisis.
Analysts said uncertainty in domestic politics ahead of 2008 presidential elections had also weighed on the market. For the year, Taiwan lagged a 32 percent gain for South Korea's KOSPI, and a 39 percent gain for Hong Kong's Hang Seng. But the TAIEX beat Japan's Nikkei, which lost about 11 percent for the year.
"We saw some year-end bargain buying as selected shares rallied towards the end of trade, but the broader index has seen a mediocre year with the US credit crisis, and will remain unstable ahead of Taiwan presidential elections," said Masterlink Investment Advisory Manager Chiang Chen-sheng. Turnover was modest at T$83.08 billion ($2.6 billion), lower than T$114.74 billion in the previous session.
Chiang added that a slowdown in the US economy could continue to dampen domestic market sentiment and investors were closely watching the strength of China's and India's economies as growth was rapidly trending towards emerging markets.
Chip designer Mediatek recouped from earlier losses and jumped 4.60 percent as the most active stock on the market by turnover, after a recent fall sparked by a weaker sales forecast pulled down its stock price.
"Sectors such as integrated chip design which have dropped in the fourth quarter could see a better first quarter as their long-term prospects are still solid," said Beyond Management's Managing Director Michael On, who expects the market to trade between 8,300 and 8,600 points this week. The overall market had hit a 9-month low in mid-December, pulling the domestic index down to around the 7,800 mark.
Shares of smartphone maker High Tech Computer (HTC) rose 3.28 percent, boosting the index as analysts said the firm's profit would see healthy growth in the next few quarters. HTC sells its own brand phones but also makes cellphones for clients such as T-Mobile and Verizon, and has said it would make phones with Google's new "Andriod" software.
Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world's largest contract chip maker, advanced 2.48 percent, helping lift the semiconductor subindex 1.82 percent higher. Shares of AU Optronics Corp, the world's No 3 LCD maker, closed up 0.79 percent after the company said on Friday the global LCD sector could see a supply shortage next year.