TAIEX closes 1% lower on GDP worries

Taiwan stocks fell yesterday for the first time this week on concern the economy didn't grow in the second quarter. Chunghwa Telecom Co Ltd (中華電信) paced declines.

Adding to losses, bank and insurance stocks fell on concern their week-long, 9 percent rally as a group was overdone as they have done little to clean up their balance sheets.

The TAIEX shed 48.97 points, or 1 percent, to close at 4638.36, though it gained 3.6 percent in the week. Within the index, 293 stocks fell and 167 rose. The total value of trade yesterday was NT$50.6 billion (US$1.47 billion), down from NT$62.89 billion yesterday.

Chunghwa Telecom fell NT$0.70, or 1.5 percent, to NT$45 on concern a stagnant economy will prompt consumers to cut their spending on telecommunication services.

Chunghwa expects sales to fall this year compared to 2000 because of competition from three new fixed-line operators.

Bank and insurance stocks fell on concern their recent rally was overdone and they have done little to clean up their balance sheets. The TAIEX bank and insurance sub-index has gained 9.2 percent since Aug. 10. "Bank asset quality will not see significant improvement this year and we may see a continued deterioration in bank earnings year-on-year because of write-offs of bad debts," said Nora Hou, a banking analyst at CLSA Global Emerging Markets in Taiwan.

China Development Industrial Bank (中華開發銀行), the biggest lender by market value, fell NT$0.40, or 1.7 percent, to NT$23.20. First Commercial Bank (第一銀行), the largest listed Taiwan lender by market value, fell NT$0.40, or 2.4 percent, to NT$16.50. United World Chinese Commercial Bank (世華銀行), the sixth-largest listed lender by market value on the island, fell NT$0.80, or 3.9 percent, to NT$19.80, after rising 17 percent this week.

Cathay Life Insurance Ltd (國泰人壽) fell NT$0.90, or 2.3 percent, to NT$37.80 after rising 4 percent yesterday after the island's biggest insurer increased its stake in United World Chinese Commercial Bank to more than 5 percent.

Some chipset designers rose. Acer Laboratories Inc (揚智科技) and Silicon Integrated Systems Corp (矽統科技) said they will introduce this month chipsets that enable Intel Corp's Pentium 4 processor to work with cheaper memory. The companies said they have permission from Intel to use the Pentium 4 processor in their chipsets. Acer Laboratories rose NT$1.30, or 3.7 percent, to NT$36.30. Silicon Integrated Systems rose NT$2.20, or 7 percent, to NT$33.80.

Formosa Group companies fell on concern domestic demand for their plastics will continue to slump, hurting sales. Formosa Plastics Corp (台塑) fell NT$1.40, or 4.1 percent, to NT$33.20. Nan Ya Plastics Corp (南亞塑膠) fell NT$0.90, or 3.4 percent, to NT$25.90.

Asustek Computer Inc (華碩電腦) fell NT$2.50, or 1.7 percent, to NT$148.50 on concern computer sales may continue to slide, lessening demand for motherboards.

Quanta Computer Inc (廣達電腦) fell NT$0.50, or 0.6 percent, to NT$81.50. Taiwan's largest notebook computer maker said it plans to sell shares in its flat-panel computer monitor unit next year to help fund a US$4.7 billion expansion program.