Taiwan Stocks: Chimei, Cathay Financial, TSMC, HTC, Wus Printed

Taiwan’s Taiex index fell 4.41, or 0.1 percent, to 8,866.35 at the 1:30 p.m. close.

Chimei Innolux Corp. (3481 TT), Taiwan’s largest maker of liquid-crystal display panels, gained 0.5 percent to NT$39.05. Chimei and Sony Corp. settled their legal dispute over patents on LCD TVs and monitors, U.S. court records show.

Financial stocks: The index tracking 36 financial stocks climbed 3.6 percent to 1,021.39, the highest since June 27, 2008, on speculation the central bank will raise interest rates tomorrow, widening interest margins for banks. Cathay Financial Holding Co. (2882 TT), the island’s largest publicly traded financial services company, advanced 1.3 percent to NT$49.05, the highest since Oct. 7. Chang Hwa Commercial Bank (2801 TT) jumped 6.9 percent to NT$25.45, the highest since April 2008.

Taiwan will raise the benchmark rate by 0.125 percentage point to 1.625 percent, according to all 14 economists in a Bloomberg News survey. “Banks can earn more interest income when they widen the gap between the lending interest rate and the deposit rate,” said Eric Chang, an analyst at Grand Cathay Investment Services Corp., referring to a practice among Taiwanese banks to delay increasing deposit rates after raising their charges for loans.

Taiwan Semiconductor Manufacturing Co. (2330 TT), the world’s largest contract chipmakers, dropped 0.4 percent to NT$70.6, while HTC Corp. (2498 TT), the biggest maker of handsets using Google Inc. and Microsoft Corp. operating systems, lost 1.5 percent to NT$880.

Some investors sold electronics stocks for banks as the Taiwan dollar may strengthen after the expected rate increase, according to Frank Lin, senior consultant at Fubon Securities Co. “Currency appreciation could hurt electronics exporters and investors are turning to financial stocks in hopes for wider interest spreads,” he said.

Wus Printed Circuit Co. (2316 TT) advanced 6.9 percent to NT$21.7, the highest since Aug. 24. The maker of printed circuit boards plans to buy back 28 million common shares at between NT$14.21 and NT$30.42 each from Dec. 29 to Feb. 28, 2011, the company said in a statement to the stock exchange yesterday.

To contact the reporter on this story: Adela Lin in Taipei at alin95@bloomberg.net

To contact the editor responsible for this story: Richard Frost at rfrost4@bloomberg.net

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