Asustek declines as foreigners sell

Taiwan's stock index had its biggest weekly drop in nine, led by Asustek Computer Inc (華碩電腦), as foreign investors sell companies they deem expensive relative to future earnings.

The TWSE Index, which has risen 83 percent since last year's low on Oct. 3, fell 48.66, or 0.8 percent, to 6,306.93 as about seven stocks fell for every two that rose. For the week, the index fell 2.2 percent, its biggest drop since Feb. 22.

ING Securities Ltd cut its weighting for Taiwan to "underweight" from "overweight," saying the index already reflected an expected recovery in overseas demand.

UBS Warburg downgraded Asustek, Taiwan's largest motherboard maker, to "hold" from "buy." Asustek, fifth in the list of net sales by foreign investors yesterday, fell NT$1.50, or 1.1 percent, to NT$137.50.

"Foreign investor selling pressure is very strong," said Yang Hsih-ming, who manages NT$1.5 billion (US$43 million) in stocks at Fu-Hwa Securities Investment Trust Co (復華投信). "The second quarter is the slow season, so electronics stock prices will continue their corrections."

The total value of trade was NT$78.5 billion (US$2.3 billion), almost a third below the six-month daily average of NT$122 billion and the lowest since March 18.

AU Optronics Corp (友達光電) fell NT$1, or 1.8 percent, to NT$54 after the Chinese-language media reported the world's third-largest flat-panel display maker was spending as much as NT$500,000 a day to supply its factories with water because of a drought. AU Optronics denied the report.

China Bills Finance Corp (中華票券) fell NT$0.15, or 1.9 percent, to NT$7.95. The underwriter of money-market securities had its rating cut to "twA-" by Taiwan Ratings Corp (中華信評), a notch above the lowest investment grade.

Chinatrust Commercial Bank (中信銀) rose NT$0.10, or 0.3 percent, to NT$30.60. Taiwan's largest credit-card issuer raised its profit forecast for this year by almost a quarter to NT$12.2 billion because of a better-than-expected economy.