Direct air links comment pulls down airline shares

Stocks fell, led by China Airlines Co (華航), EVA Airways Corp (長榮) and other airlines, after President Chen Shui-bian (陳水扁) reiterated on Monday that the nation won't restore direct air links with China.

The TAIEX fell 24.89, or 0.5 percent, to close at 4,618.98. MSCI Taiwan futures for February delivery in Singapore rose 0.3 percent to 194.00. The Taiwan Futures Index fell 0.1 percent to 4635. More than one stock fell for each that gained.

Trading at NT$62.4 billion was 28 percent below the daily average in the past three months.

Chen said proposed direct flights don't necessarily mean flying directly to China and will be required to pass through other airspace due to national security concerns.

China Airlines fell NT$0.25, or 1.7 percent, to NT$14.3. EVA fell NT$0.20 to NT$13.25.

"Direct links with China is a political issue that will take a long time before anything can be resolved," said Mike Shiao, who manages the NT$1.1 billion (US$32 million) GP Taiwan Growth Fund at Invesco Taiwan Ltd (景順投信).

"Some investors have overvalued the benefits that direct links can bring," Shiao said.

China Development Financial Holding Corp (中華開發金控) gained after chairman Liu Tai-ying (劉泰英) was detained on charges including embezzlement and misusing KMT funds. China Development rose NT$0.15, or 1.1 percent, to NT$14.05.

BenQ Corp (明基電通) rose NT$1.50, or 4 percent, to NT$39.10 after a local newspaper reported, without citing the source of its information, BenQ will announce an agreement with a large international company today. BenQ denied the report.

Chunghwa Telecom Co (中華電信) fell after the government announced plans to sell about a third of the company this year. Chunghwa Telecom fell NT$2, or 3.5 percent, to NT$55.

Delta Electronics Inc (台達電子), the world's largest maker of computer power-supply systems, rose NT$1.10, or 2.9 percent, to NT$39 after it said last month's sales almost doubled from a year ago.

Lite-On Technology Corp (光寶科技), a computer-display maker, rose NT$0.10, or 0.2 percent, to NT$41.50 after it said January sales more than doubled to NT$7.2 billion from a year ago.

United Microelectronics Corp (UMC, 聯電) rose NT$0.10, or 0.5 percent, to NT$19.40 after it said last month's sales rose 35 percent to NT$5.4 billion.

Yulon Motor Co (裕隆) rose NT$1, or 2.5 percent, to NT$41.50 after it reported January sales rose 21 percent from a year ago.