Taiwan Stock Discussion

[Stock]

Be rational, FSC urges investors

2006/6/9
The China Post staff and Bloomberg


Be rational -- that's the advice given by the Financial Supervisory Commission (FSC) for investors as they continued to sell their holdings, contributing to an over 628-point fall of the TAIEX over the past few days.

"Most OTC- and TAIEX-traded companies have been seeing a sales increase, so investors should not worry too much and should refrain from selling their stocks irrationally," said Chang Hsiu-lien, vice chairman of FSC, yesterday.

Her remarks came as the TAIEX plummeted 280.93 points yesterday to close at 6,331.81, down 4.3 percent from the previous trading day. On Monday the stocks fell over 240 points.

Yesterday's fall marked the second biggest decline of the TAIEX since the 400-point decline on Mar. 22, 2004, following the Mar. 19 shooting of President Chen and his subsequent election victory on Mar. 20. Yesterday's fall also helped erase TAIEX gains for the entire year.

"The main causes for the stock decline during this past week were similar declines in the global stock markets, plus a couple of non-economic reasons," Chang said. "But the fundamentals are good."

One non-economic reason she referred to was the drive to recall President Chen Shui-bian by the opposition as inside scoop stories that broke out this week pointed to President Chen's involvement in a series of scandals.

The fall also had to do with inflationary worries. Federal Reserve Bank of Atlanta President Jack Guynn said Wednesday that recent inflation figures are "bothersome" and that the central bank must "remain open to rethinking our policy."

Guynn's sentiments echoed those of Federal Reserve Chairman Ben S. Bernanke and other policy makers this week. Bernanke said on June 5 that inflation is accelerating and "unwelcome."

The U.S. is Taiwan's biggest export market after China. Higher borrowing costs leave consumers with less to spend on Asian-made good and other services.

Separately, the 44 participants in the semi-annual Philadelphia Federal Reserve survey reduced their estimate for U.S. economic growth from June through December to an annual rate of 2.9 percent, from a previous estimate of 3.1 percent.

Taiwan Semiconductor, the world's largest supplier of made-to-order chips, tumbled NT$4.20, or the daily 7 percent maximum, to NT$55.90. Hon Hai Precision Industry Co., Taiwan's largest electronics company by sales, fell NT$7.50 or 3.8 percent, to NT$192.50. MediaTek Inc., the world's largest maker of chips for DVD players, fell NT$24, or 6.8 percent, to NT$327.

Interest rate-sensitive financial shares also fell, led by Cathay Financial Holding Co. and Chinatrust Financial Holding Co.

Cathay Financial, the island's biggest financial services company, slipped NT$2.70, or 3.8 percent, to NT$68.80. Chinatrust, Taiwan's fourth-biggest financial services company by market value, slumped NT$1.25, or 4.7 percent, to NT$25.10.

The following stocks also rose or fell.

Nanya Technology Corp., the island's second-largest memory chipmaker, fell NT$1.05, or 5.3 percent, to NT$18.90. Winbond Electronics Corp. tumbled 68 cents, or 6.9 percent, to NT$9.12. Mosel Vitelic Inc. plunged 90 cents, or 6.8 percent, to NT$12.40.

In a related story, the Ministry of Finance yesterday announced the government's total tax revenue for May was registered at NT$220.3 billion, a fall of 29.4 percent from the same period last year.

Of note, May income tax revenue fell 52.6 percent from the same period last year as this year May had one less working day -- May 31 was the Dragon Boat Festival.

But the loss in income tax revenue was somewhat made up for in securities tax revenue, which for May was registered at NT$10.2 billion, up 120.6 percent from May last year.


http://www.chinapost.com.tw/business/detail.asp?ID=83779&GRP=E