TAIEX declines as foreign investors get rid of shares

The TAIEX declined yesterday, led by state-controlled companies, such as China Steel Corp (中鋼) and Taiwan Fertilizer Co (台肥), on concern Saturday's election may bring a change of government and its policies.

With just three days left before the election, market participants preferred to stay on the sidelines, especially as foreign investors continued to sell down their holdings.

"Investors have started making bets on the outcome of the Saturday election," said Fam Hsieh, a fund manager at Grand Cathay Securities Trust Co (大華投信).

"China plays are favored because Lien has promised better ties with China, while companies that are closer to the current government got hammered," Fam said.

The TAIEX shed 11.74, or 0.2 percent, to 6,577.98. About two stocks fell for every one that gained. Taiex futures for March delivery rose 0.2 percent to 6,565.

About 5.4 billion shares changed hands, 16 percent below the daily average in the past three months.

Shares worth NT$117.7 billion (US$3.5 billion) traded hands, which was 14 percent lower than the three-month daily average.

China Steel shed 1.5 percent to NT$33.20. Taiwan Fertilizer fell 6.5 percent to NT$30.30.

AU Optronics Corp (友達光電), the nation's largest maker of liquid crystal displays, gained 1.7 percent to NT$59 after DisplaySearch, a market research firm, said global shipments rose a higher-than-expected 61 percent in the fourth quarter, driven by demand for flat-panel televisions.

China Airlines (華航) rose 0.9 percent to NT$23.50 after reports of various companies preparing bids for the carrier when the government sells down its holding later this year.

A Chinese-language newspaper said that Sunrider International plans to invest more than NT$10 billion for a controlling stake in China Airlines. Sunrider plans to team up with an unidentified US holding company, which has investments in airlines, and a Taiwanese electronics company for the investment, the report said.

China Motor Co (中華汽車), which has a car-making venture with the government of Fujian Province, rose 4.4 percent to NT$71.