Shares sag over credit fears
Taiwanese shares closed 1.32 percent lower yesterday amid fears that the central bank may tighten credit, dealers said.
The weighted index fell 90.21 points to 6,719.21 on turnover of NT$101.42 billion (US$3.08 billion).
The market opened lower and hit an intraday low of 6,667.18 before bargain-hunting set in, with buying focusing on big caps and computer notebook-related shares, analysts said.
Taiwan’s M1B measure of money supply, considered a barometer of the stock market’s momentum, rose last month by 20.64 percent from a year earlier, the 12th consecutive rise in as many months, the central bank said.
The data sparked concern that the central bank may tighten lending to avoid an economic bubble.
“The central bank is not likely to raise interest rates at the moment, given the domestic economic condition,” said Chen Yu-yu (陳育娛) of Capital Securities (群益證券). “But the central bank may tighten credit. Should that happen, the market would lose strength.”
China Steel posts profit
China Steel Corp (中鋼), the nation’s largest maker of the metal, posted its first profit in three quarters on revalued inventories.
Net income was NT$725 million (US$22 million) for the three months ended June 30, compared with a profit of NT$15.2 billion a year earlier. China Steel reported an unaudited pretax profit of NT$774 million for the quarter on July 21.
The company posted losses for two straight quarters as the global recession reduced demand from builders and automakers and falling prices forced it to cut the value of inventories. The mill booked writebacks of stockpiles and raw materials of NT$6.16 billion after prices rebounded, it said last month.
“China Steel’s earnings are improving quarter by quarter,” said Peter Tzeng (曾耀德), an analyst at Polaris Securities Co (寶來證券) in Taipei, who rates the stock “overweight.” “Customers have replenished stockpiles, while real demand also improves.”
China Steel fell 1.7 percent to close at NT$29.5 in Taipei trading before the announcement. The stock has risen 33 percent this year, compared with a 46 percent gain in the benchmark TAIEX index.
Cathay Life buys building
Cathay Life Insurance Co (國泰人壽), the nation’s largest insurer, yesterday won a bid to acquire Shanghai Commercial & Savings Bank’s (上海商銀) branch building on Taipei’s Dunhua S Road for NT$810 million (US$24.6 million), or NT$3.77 million per ping (3.3m²), realtor Evertrust Rehouse Co (永慶房屋) said in a press statement yesterday.
That was the second-highest average unit price in the district, next to the unit land price of NT$4.07 million per ping closed in July last year for a plot of land on nearby Xinyi Road, the statement added.
The property sits on a 215 ping plot of land, totaling a floor space of 1,650 ping, the realtor said.
NT dollar weakens
The New Taiwan dollar yesterday fell slightly by NT$0.004 to close at NT$32.924 against the greenback on turnover of US$551 million.
The NT dollar has advanced 5.8 percent against the greenback in the past six months, pushing up the cost of exports in local currency terms. Overseas sales dropped for an 11th month last month, while funds based abroad pushed a net US$6.6 billion into Taiwanese equities so far this year, putting pressure on the currency to strengthen.
“It seems the central bank has been seen intervening on both sides of the currency to some extent to avoid speculation,” said Magnus Prim, chief Asia foreign-exchange strategist in Singapore at Skandinaviska Enskilda Banken AB. He predicted the currency will weaken to NT$33.20 within a month.
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