Hon Hai Precision Industries Co. and Acer Inc., two of Taiwan’s best-known IT and electronic manufacturers, are expected to report stellar first-quarter results, raising the prospect of a rally for large-cap shares in the near future, the local Economic Daily reported yesterday.

Hon Hai reported sales of NT$83.8 billion for January and February combined, up 64 percent from the same period last year, thanks to better-than-expected demand for consumer electronic.

Institutional investors are expecting Hon Hai to post higher sales in March than in February and total Q1 sales of over NT$120 billion, the report said.

Acer, meanwhile, is expected to generate as much as NT$24 billion in sales for March, some 20 to 30 percent higher than those for February, as the supply shortage of Intel’s lower-end notebook processors has slowly been corrected.

“Our American business has done extremely well, and we’re expecting a growth in sales in the second quarter from the first,” the report quoted J.T. Wang, Acer chairman, as saying.

Acer’s cumulative January-February sales reached NT$41.6 billion, a 39 percent increase from the same period last year. The addition of the NT$24 billion expected for March would help Acer post Q1 revenue of NT$65.6 billion — higher than the NT$6 billion originally estimated — and earnings in the NT$1 billion level.

Meanwhile, the company has released some 11.588 million shares of its holdings of Hon Hai’s stock, translating into potential earnings of NT$1.156 billion.

The positive outlooks came as Morgan Stanley Capital International is expected to raise the weighting of Taiwan stocks in May. Large-cap shares, including Hon Hai and Acer, are expected to see a rally after the weighting adjustment, local analysts said.

Taiwan stocks have been going through a correction lately, partially due to increased cross-strait tensions since Beijing’s passage of the so-called anti-secession law, and Taiwan’s strong response to it by holding a massive rally on March 26, where government leaders, including President Chen Shui-bian, led what organizers claimed to be 1 million people in taking to the streets of Taipei to protest the law.

The number of protesters has become the latest source of controversy between the ruling and opposition parties as Taipei mayor Ma Ying-jeou cited police statistics as suggesting only 280,000 people went.

The peaceful ending of the rally seemed to have little effects on the TAIE-- yesterday, however. The local benchmark index closed at 6,048.74, down 17.17.