New China investment rule boosts panel shares

The China Post news staff

TAIPEI, Taiwan — Manufacturers of flat panels as well as their parts and components saw their stock prices surge yesterday, after the government gave the green light to open those industries to further Chinese investments. Their increases partially drove up the benchmark index TAIEX, which rose 118.47 to close at 8,738.37, on turnover of NT$130.31 billion.

The government Wednesday announced a second wave of industries to be opened to mainland investments. These industries include semiconductor manufacturing, testing and packaging; panel production; and parts and components making. According to Liu Kun-hsi, analyst with Masterlink Securities, the biggest beneficiaries from the policy will be manufacturers of panels and their parts and components, as these companies need the cash from Chinese investors. Semiconductor firms will also benefit from the policy, yet testing and packaging operators will benefit more from it than chip foundries, he said. Being global leaders in their own right, foundries such as Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC) are not so dependent on Chinese investment, he said. Another industry that may reap the benefits of the new policy would be makers of batteries for electric vehicles (EVs), given China’s sprawling market in which 16 million to 18 million electric vehicles are currently operating, Liu said. EV battery makers will benefit from the policy more than makers of notebook PC batteries, which already have 80 percent of the Chinese market, he said. A rise was particularly noticeable among panel shares yesterday, with AU Optronics and Chimei Innolux rising 2.26 percent and 4.06 percent, respectively, to NT$27.1 and NT$33.3. Panel components makers such as Forhouse and Optimax also rose. Semiconductor testing and packaging shares, including Advanced Semiconductor Engineering and Siliconware Precision Industries, also surged, increasing 2.24 percent and 2.1 percent. Makers of electric vehicle batteries jumped as well, with Simplo rising 4.06 percent to NT$205. TSMC and UMC, the world’s largest and second largest chip foundries, rose by 0.57 percent and 1.62 percent, respectively. In other stock categories, cement stocks posted the biggest gains of the day, ending up 3.3 percent.

Agri-food stocks jumped 2.5 percent, the plastics and chemicals sector gained 2.2 percent, the financial sector added 1.6 percent, and the machinery and electronics sector increased 1.3 percent.

Textiles rose 0.8 percent, paper and pulp shares added 0.8 percent and construction stocks finished 0.2 percent higher.

A total of 2,960 stocks closed up, 1,427 finished down and 459 remained unchanged.