Chipmakers lead drop in TAIEX, banks end higher

Taiwan stocks fell as investors decided the key index's 58 percent gain since its year low on Oct. 3 is too far, too fast compared to future earnings.

United Microelectronics Corp (UMC, 聯電) led declines.

The TAIEX Index fell 30.58, or 0.6 percent, to 5,456.15 after rising as much as 0.9 percent. Within the index, 402 stocks fall and 136 rose. UMC and rival Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) accounted for all the index's drop.

The index's relative strength measure, derived by averaging out the daily gains and daily losses over 14 days, was at 74 yesterday. A value above 70 indicates an index is poised to drop.

"Ultimately it's earnings that will move the market forward," said Han Ong, head of Asia-Pacific equity strategy at Salomon Smith Barney Hong Kong Ltd. "Markets have discounted more than companies can deliver."

The TAIEX is the world's third-best performing market in the last three months, up 45 percent in US dollar terms. The total value of trade yesterday was NT$140.4 billion (US$4.1 billion), 63 percent higher than the daily average of NT$86.2 billion since Oct. 3.

United Microelectronics Corp fell NT$2, or 4.1 percent, to NT$46.80. The second-biggest made-to-order chipmaker has gained 100 percent since Oct. 3 when its shares fell to this year's low. Its US shares fell 0.4 percent to US$9.22 Friday. November sales at UMC rose about 2 percent from October to NT$4.8 billion.

Taiwan Semiconductor Manu-facturing co, the biggest made-to-order chipmaker, fell NT$2.50, or 3 percent, to NT$81. Its shares have gained 84 percent since Oct. 3.

China Airlines Co (華航) rose NT$0.60, or 4.5 percent, to NT$13.90 after Taiwan's biggest airline said it will sign a marketing agreement yesterday with Delta Air Lines Inc, the third-largest US carrier, a move that may help Taiwan's largest carrier boost sales.

International Commercial Bank of China (中銀) rose NT$1.40, or 6.9 percent, to NT$21.70. International Commercial Bank, the fifth-largest listed Taiwan lender by assets, and Chiao Tung Bank (交通銀), the ninth-largest listed Taiwan lender by assets, may together form a holding company, the Commercial Times newspaper said, without citing anyone. Chiao Tung rose NT$1.50, or 6.9 percent, to NT$23.40. International Commercial Bank and Chiao Tung officials couldn't be reached for comment.

"Chiao Tung is an investment bank much like rival China Development Industrial Bank. International Commercial Bank is a commercial bank with experience in foreign exchange trading," said Steven Hsieh, who manages about NT$2.5 billion (US$72 million) at Dresdner Asset Management Taiwan. "If these two companies combine then it will be good for them."

Ritek Corp (錸德) fell US$0.70, or 1.8 percent, to NT$38 after the largest maker of recordable compact discs said Friday after the market closed it plans to raise up to US$225 million by selling bonds to overseas investors.

Silicon Integrated Systems Corp (矽統) fell NT$1.50, or 2.7 percent, to NT$54.50 after the chipset maker said Saturday it plans to raise as much as US$584.8 million selling shares and bonds overseas to repay bank loans and fund a new factory building.

Taipei Bank (台北銀) rose NT$1.80, or 7 percent, to NT$27.60 after the Commercial Times newspaper reported, without citing named officials, that the lender plans to pay about NT$252 million (US$7.3 million) to buy about 70 percent of closely held Apollo Securities Investment Trust (阿波羅投信). Taipei Bank officials couldn't be reached for comment.