Stocks decline as MAC dashes trade talk hopes

Share prices closed 0.23 percent lower yesterday as hopes for an improvement in cross-strait trade and other links were dashed after a preliminary meeting of a government economic conference failed to ease restrictions, dealers said.

The Mainland Affairs Council (MAC) announced earlier that no consensus was reached on either the easing of rules on China-bound investment or on expanding cross-strait transport links.

"People had hoped the economic forum would reach a consensus on liberalizing China policy, but that hope is slipping away,'' said Sam Hsieh, a fund manager at Grand Cathay Securities Investment Trust Co (大華投信), which oversees a fund worth US$977 million in Taipei.

The TAIEX fell 14.60 points at 6,376.39, on turnover of NT$67.84 billion (US$2.07 billion).

Decliners led risers 614 to 335, with 148 stocks unchanged.

The market languished in a tight range "as investors could not bring themselves to either sell down their holdings or buy shares aggressively," Jih Sun Securities Investment (日盛投顧) deputy manager Wilson Lien said.

AU Optronics Corp's (友達光電) earnings and guidance did little to stimulate trade but Lien noted the company's unexciting figures may have been priced in.

The company reported on Tuesday that its second-quarter net profit tumbled nearly two-thirds to NT$182 million from the year-earlier period on steep declines in panel prices.

But AU Optronic's shares may be supported by a report which said the company won its first order from Samsung Electronics Co to supply liquid-crystal displays (LCD) for televisions, dealers said. AU Optronics was up 1.5 percent at NT$48.50.

Apart from TFT-LCD panels, makers of DRAM chips remain the most promising in the near-term as both sectors appear likely to enjoy a clearer recovery in product prices for the rest of the year, Lien said.

Among DRAM makers, Nanya Technology Corp (南亞科技) was up NT$0.05 at NT$22.10 while Inotera Memories Inc (華亞科技) was down NT$0.20 at NT$34.80.

However, Almost all stocks with China ties fell after news that the government-sponsored economic conference might fail to agree on loosening investment restrictions on the mainland.

Uni-President Enterprises Corp (統一) declined 2.7 percent to NT$25.45. Taiwan's largest food company, which is considering opening convenience stores in China, is among those seeking a relaxation of restrictions on China investments. Taiwan caps companies' investments in China at 40 percent of their net worth.

Airlines such as EVA Airways Corp (長榮) and China Airlines Ltd (華航) also declined. China Airlines, the nation's largest carrier, dropped 0.7 percent to NT$14.40. EVA Airways, the second largest, fell 1.6 percent to NT$12.60.

BenQ Corp (明基), slumped 3.7 percent to NT$18.10 on reports that the company may post a loss of NT$7 billion in the second quarter.