TAIEX falls to year's lowest level

Taiwan's key stock index fell to its lowest level this year, led by United Microelectronics Corp (聯電), on concern economic and earnings growth will continue to slow even if the central bank cuts interest rates this week.

The TAIEX slumped 119.22, or 2.4 percent, to 4785.12 points, its biggest one-day loss in percentage terms since May 21. Within the index, 406 stocks fell and 56 rose. The total value of shares traded today was NT$36.6 billion (US$1.06 billion), less than half the year to date daily average of NT$83.2 billion.

Taiwan's export orders and industrial production dropped in May for a third straight month and unemployment rose to a fifth straight record, reports last week showed.

The central bank meets tomorrow and is expected to cut interest rates later this week.

``The market will not move past 5,200 until we receive good news on the economy,'' said Cheng Yi-sheng, who helps manage NT$1.5 billion (US$44 million) in investments at Taiwan Securities Ltd (台証證券). ``It's the economic fundamentals that have driven the market down.'' In the last three months, the TAIEX has been the worst-performing market in the world in US dollar terms, down 23 percent.

The following stocks made significant gains or losses: UMC fell NT$2.20, or 4.6 percent, to NT$45.20 on concerns the company's losses may extend to the third quarter, after it warned it may report a second-quarter loss.

Asustek Computer Inc (華碩電腦) fell NT$8, or 4.6 percent, to NT$166. The computer motherboard's sales fell to 800,000 units in May from 940,000 in April and 1.6 million units in March, ABN Amro Asia Ltd said.

Hon Hai Precision Ltd (鴻海精密) fell NT$8, or 4.5 percent, to NT$170 on concern demand for the company's electronics components will slide.

Silicon Integrated Systems Ltd (矽統科技) fell NT$3.20, or 6.8 percent, to NT$43.70 on concern chipset prices will slide as motherboard sales slump. ABN-Amro has a ``reduce'' recommendation on the stock.

Sunplus Technology Ltd (凌揚科技) fell NT$8.50, or 5.9 percent, to NT$136. Goldman Sachs Group Inc recommends investors sell the stock as it trades at a premium to other integrated circuit design companies. The company said on June 20 its second-quarter sales wouldn't meet its forecast.

Taiwan Semiconductor Manu-facturing Co ( 台積電) rose 29 cents, or 0.5 percent, to NT$61. The biggest made-to-order semiconductor maker will make microprocessors for Transmeta Corp, a chipmaker backed by Microsoft Corp co-founder Paul Allen and financier George Soros.

VIA Technologies Inc (威盛電子) fell NT$17, or 6.8 percent, to NT$234. VIA's shares gained 29 percent this year compared to a 1 percent gain in the key TAIEX.