Flat-panel makers fall on report that prices will fall

The TAIEX fell for the first day in three yesterday. Flat-panel display makers such as AU Optronics Corp (友達光電) declined on an industry report prices are poised to fall faster than expected this year on rising inventories.

Cathay Financial Holding Co (國泰金控) advanced after the newly-established Financial Supervisory Commission pledged to improve the banking industry's ties with China.

The TAIEX fell 2.53 points to 5,836.91. About one share rose for each that fell. The benchmark rose 2.3 percent in the previous two sessions. Futures for July delivery advanced 0.3 percent to 5,765.

AU Optronics, the nation's largest flat-panel display maker, fell 1 percent to NT$50.50. Chi Mei Optoelectronics Corp (奇美電子), the second largest, slipped 1.9 percent to NT$53.

Rising inventories of liquid crystal displays for computer monitors and televisions caused some order cancellations last month, researcher DisplaySearch said.

"Demand for LCDs is not as strong as previously anticipated, and we now expect flat-panel display makers' June sales to be lower than May," said Kevin Lin, who manages the equivalent of $60 million at Shinkong Investment Trust Co (新光金控).

Cathay Financial rose 1.7 percent to NT$59.50. Fubon Financial Holding Co (富邦金控) added 2.7 percent to NT$30.10.

Nanya Technology Corp (南亞科技) led gains among exporters after US Federal Reserve raised the benchmark interest rate by a quarter-point to 1.25 percent and reiterated that further increases can come at a "measured" pace.