Lin will intervene to stop `unreasonable' stock fluctuations

Minister of Finance Lin Chuan (林全) said yesterday that the government stabilization fund will intercede if there are unreasonable fluctuations in the stock market.

Lin told a Lunar New Year gathering at the Taiwan Stock Exchange that the ministry is closely watching developments that could lead to war in Iraq and will monitor stock movements.

The TAIEX slid 181.58, or 3.6 percent, its biggest decline since Aug. 5 last year, to 4,833.58 in the first day of trading after the Lunar New Year holiday. The stock market had been closed since Jan. 29.

Stocks were pushed lower on concern a standoff between the US and Iraq will linger.

"The prolonged threat of a war will continue to sideline some investors," said Yeh Chin-ling, who manages NT$1.6 billion (US$46 million) at Grand Cathay Securities Investment Trust Co (大華投信).

Trading was worth NT$87.9 billion, in line with daily average in the past three months.

About seven stocks dropped for every two that gained.

Taiwan Semiconductor Manufacturing Co (TSMC,台積電) tumbled after saying demand may not improve in the first three months of 2003.

"Taiwan chipmakers are running at low utilization rates as weak consumer demand for new technology gadgets stalled a recovery for chips," Yeh said.

"The outlook for Taiwan chipmakers is particularly gloomy, because rivals in China are ramping up production," Yeh said.

TSMC lost NT$3.30, or 6.9 percent, to NT$44.40. Fourth-quarter net income unexpectedly fell because of new equipment costs and lower demand, the company said before the holiday.

Sixty percent of capacity will be used in the first quarter, down from 61 percent in the fourth, said chairman Morris Chang (張忠謀).