Shares expected to remain weak

Taiwanese shares are likely to keep falling next week after plummeting 9.34 percent last week on worries that China and the US will hike their interest rates, dealers said Friday.

Old-economy shares, which suffered the heaviest losses in the past week, would continue to be pressured on concerns China's moves would hurt Taiwanese exports, particularly raw materials such as steel and cement.

Investors were concerned after Beijing said it would take "forceful measures" to cool its economy. More than a quarter of Taiwan's exports now go to China.

China's top executive body has ordered that no approvals for new steel, aluminum and cement projects be made this year in a bid to halt "haphazard" and "redundant" investments, state media said Friday.

There were also fears about the latest SARS outbreak in China.

Taiwan's weighted index plunged 630.29 points in the past week to close at 6,117.81, following a 1.03-percent decline the previous week.

Niven Wang, broker at President Capital Management Corp (統一投顧), said the worries would continue to push share prices lower early next week.

"China's efforts to cool its economy have clouded the prospect of Taiwan's economy and what the market fears the most is uncertainty," he said, adding the impact could last for two months.

Sentiment might also be dampened by anticipation that the US Federal Reserves might raise interest rates in the week ahead, Wang said.

But Mao Jen-chieh (毛仁傑), president at Pro Standard Capital Management (禮正證券投顧), said Taiwanese electronics stocks would benefit from an expected improvement in US industry, particularly the technology sector, in the second half.