Tue, Jun 29, 2004 - Page 11 News List

Stocks fall for fear of interest rate rise, Procomp aftermath

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Stocks fell for the first day in four yesterday after some investors judged the TAIEX's 4.2 percent gain last week as excessive given concerns that the central bank may lift interest rates if the US raises borrowing costs this week.

Financial issues led the broad decline on profit-taking and a rumor that some local banks could suffer losses related to Procomp Informatics Ltd (博達科技) defaulting on NT$2.98 billion (US$88 million) in corporate bonds earlier this month.

The TAIEX fell 92.71, or 1.6 percent, to 5,709.84. The benchmark last week had its biggest weekly advance since the five days to April 2. About five shares fell for each one that rose. Futures for July delivery shed 2.1 percent to 5,615.

"Investors here are concerned over a probable move by the central bank" if the US Federal Reserve lifts interest rates, said Kevin Yang, vice president of International Investment Trust Co (國際投信).

Cathay Financial Holding Co (國泰金控), the nation's largest financial group, slumped 3.2 percent to NT$60.50. Mega Financial Holding Co (兆豐金控), the second largest, declined 2.7 percent to NT$21.80.

AU Optronics Corp (友達光電), the world's third-largest maker of flat-panel displays, lost 3.9 percent to NT$50. Chi Mei Optoelectronics Corp (奇美電子), the nation's second-largest flat-panel display maker, dropped 4.6 percent to NT$51.50.

Taiwan Semiconductor Manu-facturing Co (台積電), the world's largest supplier of made-to-order chips, fell 0.7 percent to NT$45.90. Rival United Microelectronics Corp (聯電) slipped 2.1 percent to NT$23.60.

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