Shares of the notebook computer firm Asustek Computer Inc. closed sharply higher Thursday on the first day of its trade resumption, as investors were upbeat about its earnings outlook after the spinoff of its manufacturing arm Pegatron Technology Corp., dealers said. Asustek rose 6.89 percent to NT$240.50, with 3.09 million shares changing, while Pegatron gained 8.19 percent to reach NT$38.95 in its debut on the main board. The weighted index closed up 0.10 percent at 7,589.89. 'Investors are in favor of the spinoff idea, as the gross margin for contract notebook computer production is on the decline amid fierce competition, ' Taiwan International Securities analyst Michael Chiang said. 'With the spinoff, Asustek will now be able to put more into promoting its brand worldwide, as Acer is doing,' Chiang said. Trade of Asustek shares was suspended in mid-May after it announced that it will list Pegatron on the local bourse following the spinoff. An analyst with a regional brokerage firm said the gains posted by Pegatron reflected a low listing price of NT$36. 'There are concerns about the falling gross margin. Investors want to see Pegatron come up with business diversification strategies to offset its disadvantages,' the analyst said. He forecast that Pegatron's gross margin will be about 5 percent, adding that he was cautious about Pegatron's earnings outlook. Pegatron President Cheng Chien-chung said that with the fading impact of the debt problems in Europe, his company has seen an increase in orders based on recovering demand in Europe. Cheng said he expects Pegatron's sales in the second half to grow about 20 percent from the first half. Calvin Huang, an analyst with Daiwa-Cathay Capital Markets, said he has set a target price of NT$300 for Asustek and expects the stock to outperform the broader market. The spinoff leaves Asustek without the financial burden of rising labor costs in China, and its operations are unlikely to be affected by a stronger Chinese yen, Huang said. Asustek has built itself as a strong PC brand in China and is likely to use its strength to expand there, he said. He forecast that China will absorb more than 25 percent of Asustek's sales by the end of 2010, compared with the current 20 percent. 