Tue, Jul 31, 2007 - Page 11 News List

Stocks fall on investors' US economy concerns

TWO GAIN, THREE LOSE The TAIEX dropped 1 percent, falling for the fourth day as a decline in the US housing sector sparked concerns about growth in the US market

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As stocks fell for a fourth day, China Steel Corp (中鋼) led declines on concern a deepening US housing slump will dampen the world's biggest economy and prompt investors to shun riskier assets.

"Concerns about the US economy growth spooked investors," said Michael On, who looks after the equivalent of US$100 million as managing director at Beyond Asset Management Co in Taipei. "Slowing US demand will hurt export-dependent countries like Taiwan."

The TAIEX index dropped 89.71, or 1 percent, to close at 9,072.57 in Taipei. The measure slumped 6.9 percent in the past four trading days. About three stocks declined for every two that gained. Futures due next month added 0.1 percent to 8,990.

China Steel, the nation's largest steelmaker, fell NT$1.50 (US$0.046), or 3.5 percent, to NT$41. Cathay Financial Holding Co (國泰金控), the nation's largest financial holding company, slipped NT$4.30, or 5.1 percent, to NT$80.80.

Hon Hai Precision Industry Co (鴻海精密), which supplies iPod to Apple Inc, dropped NT$1.50, or 0.6 percent, to NT$262.

US residential investment declined at 9.3 percent annual rate in the second quarter, after contracting by 16 percent in the previous three months, commerce officials said on Friday. Consumer spending slowed to 1.3 percent annual pace, from 3.7 percent in the first quarter.

US stocks dropped on Friday after Cadbury Schweppes Plc became the first company to delay an acquisition because of "extreme volatility" in debt markets. Banks have failed to sell at least US$32 billion in takeover-related debt to investors on concern that losses from subprime mortgages and leveraged buyouts are widening.

Elsewhere, High Tech Computer Corp (宏達電), the world's biggest maker by volume of handsets based on Microsoft Corp's Windows operating system, climbed NT$17, or 2.8 percent, to NT$620.

Joey Cheng, an analyst at Goldman, Sachs & Co, raised his share-price estimate for High Tech to NT$790 from NT$760. Cheng kept his recommendation for the stock at "neutral."

Asustek Computer Inc (華碩電腦), the nation's largest maker of boards that connect components in personal computers, dropped NT$0.30, or 0.3 percent, to NT$92.70. The company denied a report yesterday by the Chinese-language Commercial Times saying it was planning to raise salaries by more than 30 percent. Asustek did not have plans to raise pay and increase performance bonuses by 30 percent, the company said in a statement.

Innolux Display Corp (群創光電), the world's second-largest maker of flat-screen computer monitors, declined NT$6, or 4.1 percent, to NT$139. Innolux plans to start building an NT$60 billion ($1.83 billion) liquid-crystal display factory in January in Taiwan, a spokesman said by telephone.

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