TAIEX ends upward run after weak exports report

Shares dropped for the first time in five days yesterday. Hon Hai Precision Industry Co (鴻海精密) paced declines after a government report showed that exports grew less than expected last month.

"Signs of slowing overseas demand are weighing on investor confidence," said Michael On (洪瑞泰), who oversees US$100 million as managing director at Beyond Asset Management Co (晉昂證券投顧) in Taipei.

"Exporters will face a harsher environment," he said.

Stocks also fell after a US jobs report raised speculation that Federal Reserve policy makers will cut interest rates less than expected, limiting a boost to the world's largest economy.

The TAIEX index fell 124.35, or 1.4 percent, to close at 8,598.03 in Taipei, after climbing 1.6 percent in the past four trading days. More than three stocks dropped for every one that gained. Futures due this month slid 1.7 percent.

Hon Hai, Taiwan's biggest electronics exporter, declined NT$4, or 2 percent, to NT$200. Taiwan Semiconductor Manufacturing Co (台積電) slipped NT$1.50, or 2.4 percent, to NT$61.10. Taiwan Semiconductor makes about three quarters of its sales to US buyers.

Taiwan's export shipments rose 11.8 percent from a year earlier, slowing from a 14.4 percent gain in the previous month, the Ministry of Finance said on Friday. Exports, which account for half of Taiwan's economy, were expected to grow 15 percent according to a Bloomberg News survey.

The US Labor Department said on Friday the jobless rate remained at 4.7 percent for the third month in a row after a gain of 94,000 jobs. Economists in a Bloomberg survey had expected an increase of 80,000 jobs and an unemployment rate of 4.8 percent.

The increased workers to payrolls figures prompted traders to lower bets that Fed policy makers will cut borrowing costs by half a percentage point at their meeting today.

Futures contracts indicated a 26 percent chance of a half percentage point cut, compared with a 36 percent likelihood a day earlier. The US is Taiwan's largest export market after China.

AU Optronics Corp (友達光電), the world's third-largest maker of LCDs, declined NT$1.50, or 2.4 percent, to NT$61.90. High Tech Computer Corp (宏達電), the world's biggest maker by volume of handsets based on Microsoft Corp's Windows operating system, dropped NT$11, or 1.8 percent, to NT$614.

Nanya Technology Corp (南亞科技), the nation's second-largest memory-chip maker, dropped NT$0.60, or 3.2 percent, to NT$18. Nanya will have to pay more to borrow after Taiwan regulators inspected the island's top 10 providers of syndicated loans to prevent lenders from undercutting each other on interest rates, the Economic Daily News reported.

Delta Electronics Inc (台達電子) gained NT$1, or 0.9 percent, to NT$112.

Delta's sales, including those of its business units, rose 29 percent from a year earlier to NT$12.6 billion last month, a company statement said.