Chips stocks drop on price fears, but China Steel rises

Shares finished weaker yesterday after falls on Wall Street overnight, but steel stocks bucked the trend on expectations of a generous dividend payout by a major steel firm.

The TAIEX dropped 39.89 points, or 0.7 percent, to 6,032.47, with turnover of NT$59.05 billion (US$1.9 billion).

Memory chip firms fell after a newspaper reported Semiconductor Manufacturing International Corp (中芯), China's largest chip firm, has begun mass production of 12-inch chips, which is likely to pressure prices in coming months.

"Concerns about a weak second quarter also hurt confidence in technology stocks," said Bill Huang, a sales person at KGI Securities (中信證券).

Bucking the broad market's decline, steel stocks gained 1.2 percent as a whole.

Investors expected China Steel Corp (中鋼) to recommend a generous dividend payout yesterday.

China Steel's shares rose 0.8 percent to NT$35.90. After the market closed, the company said it will pay a cash dividend of NT$3.90 per share on last year's earnings, 30 percent higher than a year ago, according to a statement the company filed to the stock exchange.

Foreign investors sold a net NT$12.1 billion of the nation's stocks yesterday, according to stock exchange data, which drove the local currency to fall for a fifth day in Taipei.

The NT dollar fell NT$0.065 to NT$31.092 against its US counterpart.

The local currency may decline to NT$31.50 this week and then to NT$31.75, said William Chou, a foreign-exchange analyst in Taipei at Hua Nan Commercial Bank (華南銀行).