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Wed, Feb 28, 2001 - Page 18 News List

Telephone wars drive down stocks

BLOOMBERG , TAIPEI

Taiwan stocks fell for a fifth day, led by Chunghwa Telecom Co (中華電信) on expectations fixed-line telephone rates will decline as mobile phone competitors further erode the company's market share.

The TWSE Index fell 41.33, or 0.7 percent, to 5674.69, after earlier rising as high as 5805.40. Within the index, 265 stocks fell and 170 rose. The total value of shares traded today was NT$86.8 billion (US$2.7 billion), just above the year to date average of NT$81.5 billion.

Analysts said that share prices may slide in the next month on expectations first-quarter earnings for the island's companies will disappoint investors as global and domestic demand and growth ebb.

"We're expecting a pull-back on first-quarter earnings disappointment, but the worst is behind us," said Dickson Ho, the Taiwan strategist at Morgan Stanley Dean Witter Taiwan Ltd.

The index fell 4 percent in February after rising 20 percent in January in local currency terms.

Chunghwa Telecom fell NT$2, or 2.9 percent, to NT$67, its lowest closing price since the stock began trading on Oct. 26. The dominant telecommunication company's expenses in the third-quarter last year rose while its long-distance revenue fell. Investors expect less than 10 percent revenue and earnings growth this year and next. All four analysts surveyed by IBES International have "sell" recommendations.

Cathay Life Insurance Ltd (國泰人壽) fell NT$1.50, or 2.4 percent, to NT$62. The government said last week the jobless rate rose to 3.5 percent from December's 3.4 percent, the highest since the government began compiling figures in 1978.

More people without jobs means that fewer can afford insurance products.

Hon Hai Precision Industry Ltd (鴻海精密) rose NT$1, or 0.5 percent, to NT$201, after earlier rising as high as NT$206 after the Commercial Times newspaper, without citing sources, said the company received an order to assemble PlayStation 2 game consoles for Sony Corp. Hon Hai said the report wasn't true.

Lite-On Technology Corp (源興科技) rose NT$0.90, or 2 percent, to NT$45.70 after the Internet news service CTech reported, citing general manager Liao Hsueh-fu (廖學福), that the maker of monitors had won orders from NEC Corp and Mitsubishi Electric Corp to make flat panel displays.

Taiwan Semiconductor Manufacturing Co (台積電) rose NT$1, or 1.1 percent, to NT$90. The world's biggest made-to-order chipmaker rose on expectations further rate cuts by the Federal Reserve will boost economic growth and demand in an economy which takes a third of Taiwan's exports. Most Wall Street bond dealers who deal directly with the Fed expect the central bank will cut interest rates by a half-point to 5 percent, according to a Bloomberg survey.

Some banks gained on expectations another US rate cut will prompt the Central Bank of China (央行) to follow suit. The CBC cut its key interest rate a quarter point this month following two rate cuts by the Fed. Lower interest rates may boost loan growth and income at banks and help companies meet their debt obligations.

Some memory chipmakers declined. The spot price for the industry-standard 64-Megabit 8X8 dynamic random access memory chip is at US$2.27, below the cost of production for many memory chipmakers and down from US$8.96 on July 13.

Mosel Vitelic Inc (茂矽電子) fell NT$0.30, or 1.3 percent, to NT$23. Powerchip Semiconductor Corp (力晶半導體) fell NT$0.60, or 2.7 percent, to NT$21.50.

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