Tue, May 23, 2006 - Page 11 News List

Interest rate fears, regional bourses drag down TAIEX

AFP AND AP , TAIPEI

Share prices closed down 1.92 percent and back below the key 7,000 points level yesterday as an early modest rebound gave way to continuing concerns over the outlook for interest rates, dealers said.

They said uncertainty about whether foreign investors will sell down their holdings further added to the negative tone since their lead can be crucial to what local retail investors do.

The TAIEX closed down 135.89 points at the day's low of 6,938.26. Turnover was NT$121.57 billion (US$3.79 billion).

Decliners led gainers 622 to 211, with 72 stocks unchanged.

"Foreign investors apparently sold holdings today due to concerns over the [future] movement of [US] interest rates," said Frank Lin, senior vice president at Fubon Securities Co (富邦證券).

Lin said that with added worries about inflation, "shares are facing a price correction."

Capital Securities Corp (群益證券) sales manager Diana Wu said falls on the South Korean and Japanese stock markets also prompted declines on the local market.

"The overall pullback in Asia indicates some foreign institutions might have started adjusted their fund allocations, switching some of their capital to other regions," Wu said.

During trading yesterday, the Korea Composite Stock Price Index was 2.4 percent lower, while the Nikkei Stock Average 225 was down 0.4 percent.

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world's largest contract chipmaker by revenue, dropped 2.7 percent to NT$60.8.

TSMC's smaller rival, United Microelectronics Corp (聯電), fell 4.8 percent to NT$19.8.

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