Taiwan stocks rise but AU falls after Q2 results

Published: 23 Jul 2009 18:53:20 PST

* Shares of PC makers up on hopes of better Q3 shipments

* AU gives up gains as investors take profits

* Index seen trading between 6,850-7,200 points next week

TAIPEI, July 24 - Taiwan stocks rose 0.56 percent on Friday to a near two-month intraday high on robust U.S. and Taiwan corporate earnings, but investors used early gains to sell some technology shares such as AU Optronics <2409.TW>.

The main TAIEX share index <.TWII> rose 39.21 points to 7,020.09 as of 0204 GMT.

Quanta <2382.TW>, the world's biggest contract lap PC maker, jumped more than 3 percent on hopes of better sales and shipments in the third quarter, sending the computer and peripheral equipment sub-index <.TCPI> 2.13 percent higher.

AU Optronics <AUO.N>, the world's third-largest LCD maker, started off strong early in the session after the company posted a narrower second-quarter loss, but later gave up gains as investors locked in profits.

"Shares of some computer makers and strong U.S. earnings boosted Taiwan stocks today, but the gains were offset by a selloff in technology shares such as as Hon Hai and AU Optronics," said Tom Tang, a vice president at Masterlink Investment Advisory.

AU Optronics also projected on Thursday a strong third quarter outlook as demand for flat-screen TVs shot up in key markets such as China, where a massive government stimulus plan has helped in domestic spending. [ID:nTP188009]

Sector leader Samsung Electronics <005930.KS> said on Friday its LCD business posted a 3 percent profit margin in April-June against a 8 percent loss margin in the first quarter. [ID:nSEL000710]

"But I think the market's too optimistic about LCD shares. There could be an oversupply problem as major LCD makers such as Samsung look to expand capacity," said Tang.

The LCD sector has been one of the few bright spots in the broader technology sector amid a global economic recession, and some analysts believe the gain would continue as new applications such as touchscreen PCs spur fresh demand.

The optoelectronics sub-index <.TOPI> had gained 91 percent since the beginning of January, outperforming the big board's rise of more than 50 percent during the same period.

After the strong run-up over the past few months, analysts said they expected the main index to trade between 6,850 and 7,200 next week before more quarterly earnings from local technology companies.

For a table of foreign trading in Taiwan stocks, double-click on [ID:nTP170358]