TAIEX drops to four-month low on war woes

Shares slid to their lowest close in four months yesterday, as investors stayed on the sidelines ahead of a long weekend and amid heightened geopolitical worries.

Domestic financial markets will be closed today for a public holiday.

The TAIEX slid 24.23, or 0.5 percent, to close at 4,432.46. Decliners outnumbered advancers 436 to 172, while 136 issues ended the day unchanged. The value of trade was NT$41.82 billion, and the index dropped 2.5 percent this week.

The close was the lowest for the index since it ended at 4,386 on Oct. 31. It was also the lightest daily dealings for this year.

Compal Electronics Inc (仁寶電腦), the nation's second-largest notebook-computer maker, dropped after Hewlett-Packard Co's chief executive officer said the threat of a US-Iraq war is making corporations reluctant to buy computers and related equipment.

Compal dropped NT$0.70, or 2.1 percent, to NT$33.50.

"The shadow of war will continue to weigh on Taiwan stocks because most funds are invested in electronics makers," said David Lu, who manages NT$1 billion (US$29 million) of Taiwan equities at Shinkong Investment Trust Co (新光投信).

Asustek Computer Inc (華碩電腦), the nation's biggest maker of boards that connect chips in personal computers, dropped NT$1, or 1.7 percent, to NT$59.

"The uncertainty of war adds to the cautiousness; it makes people even more risk averse," Hewlett-Packard chief executive officer Carly Fiorina said in an interview after speaking at a Goldman Sachs Group conference in La Quinta, California.

"The prospect for war [in Iraq] is getting closer," said Daniel Hsin, an analyst at Capital Securities Corp (群益證券).

He said that even if government funds were trying to support the market, they weren't very aggressive about it.

"It's not logical for the government to come in now. What will they do if war does break out?" Hsin said.

Chunghwa Telecom Co (中華電信) rose NT$0.50, or 1 percent, to NT$52.50.