Shares echo Wall Street
Share prices closed down 2.54 percent yesterday following a Wall Street plunge at the end of last week that dealers attributed to fears that debt problems in Europe will worsen after a financial crisis surfaced in Hungary.
The TAIEX closed down 186.76 points at 7,157,83 on turnover of NT$82.48 billion (US$2.56 billion).
The market opened 2.79 percent lower on a knee-jerk reaction to Wall Street’s dive to below the key 10,000 point level, and the losses extended, led by the high tech sector, during the trading session before rebounding on bargain hunting toward the close, the dealers said.
Edward Chen, vice president of First Capital Management Ltd’s research department, said that as Hungary is a small economy and not a member of the eurozone, its debt problems are unlikely to pose a serious threat to the economy in the EU.
“However, amid the already weak investor sentiment, the development has dealt a blow to market confidence at home and abroad,” Chen said. “The impact so far has been very psychological, in particular as investors witnessed the panic selling on Wall Street.”
Chen said many local investors are afraid that accelerating debt problems in Europe will hurt demand and cut consumption in the European market.
“The worries are running deep, as Taiwan is an export-oriented economy with so many high-tech firms heavily dependent on foreign markets,” he said, adding that bellwether electronic heavyweights faced heavy selling as a result of the concern.
Lower demand hurts MediaTek
Lower demand in China for cellphone microchips as a result of tighter government monetary policy affected last month’s sales figures of integrated circuit designer MediaTek Inc (聯發科), analysts said yesterday.
MediaTek posted NT$9.87 billion in sales for last month, down 18.14 percent from April’s NT$12.06 billion, although last month’s figure was 5.44 percent higher year-on-year.
Demand for cellphone microchips in China reached a peak in April before the long Labor Day holiday early last month, TLG Asset Management (台壽保投信) analyst Arch Shih (施博元) said.
“This shows that China’s recent tightening of its monetary policies to cap inflation is working,” Shih said.
In the first five months of the year, MediaTek posted NT$54.6 billion in sales, up 27.33 percent year-on-year.
Shih said there are concerns about MediaTek’s gross profit margin, as competition in China is getting stiffer.
The forecast for the company’s gross profit margin for this year is 57 percent.
“I do not think it will be easy for the company to achieve the 57 percent margin, given the stiffer competition in China,” he said.
FPG workers protest in Taipei
Formosa Plastics Group (FPG, 台塑集團) said 500 to 600 employees gathered in front of the company’s Taipei headquarters yesterday asking for bigger bonuses.
The protest ended without violence, a company public relations officer said by telephone. The company controls Formosa Plastics Corp (台塑), the nation’s biggest maker of polyvinyl chloride, or PVC, and Nan Ya Plastics Corp (南亞塑膠), the world’s largest processor of plastics for imitation leather and pipes.
FPG pays bonuses based on earnings per share (EPS), the company said in a statement. Bonuses from last year’s profit equal to 5.57 times of base monthly salaries, the company said, without giving a comparison.
Formosa Plastics Corp reported EPS of NT$4.50 last year, compared with NT$3.45 in the previous year, the company said on March 29.
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