Taiwan Stocks Plunge; TSMC, UMC, Memory Chip Makers Lead Slide

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10/18 22:19 Taiwan Stocks Plunge; TSMC, UMC, Memory Chip Makers Lead Slide By Brett Cole

Taipei, Oct. 19 (Bloomberg) -- Taiwan stocks plunged as investors around the world dump technology shares while local investors fret about the government's ability to pass laws in an opposition-dominated parliament.

Taiwan Semiconductor Manufacturing Co. led declines. The TWSE Index fell 303.09, or 5.5 percent, to 5132.78, on course for its lowest close since April 1996. In U.S. dollar terms, the TWSE Index is the world's second-worst performing market in the world in the last month, down 26 percent. Within the index today, 436 stocks fell and just four rose. Electronic stocks accounted for 60 percent of the index's decline.

``Domestic political issues and the global economic slowdown and its effect on demand for information technology products will dominate trading,'' said Shih Mei, who manages $25 million in Taiwan stocks at National Investment Trust Ltd. ``It's hard to predict the market's bottom. I'm selling some electronic stocks.''

Accelerating the decline, individual investors who have bought stock on credit may be forced to sell as the value of their shares slump, analysts said this week. Individual investors account for about 80 percent of Taiwan's daily trade.

Liu Chi-tung, the regional head of technology research in Asia ex-Japan at UBS Warburg LLC, said investors around the world are selling semiconductor stocks because they're not sure chipmakers' 2001 earnings will rise year-on-year.

``It's still too early to seek an entry point in'' TSMC shares, Liu said. ``There is a strong de-rating pressure by the capital markets toward the shares.''

Yesterday, the Nasdaq Composite Index, of which more than 50 percent are technology related shares, fell as much as 5.8 percent before paring its losses to close down 1.3 percent.

The following stocks are making significant gains or losses.

Chipmakers which make chips on a made-to-order basis slumped. In U.S. trading, RF Micro Devices Inc. sank 38 percent after the maker of cell-phone semiconductors said it expects fiscal third- quarter earnings to fall short of forecasts on slowing demand. Lehman Brothers Inc. analyst Daniel Niles said growth in semiconductor sales won't accelerate as forecast this quarter.

Taiwan Semiconductor Manufacturing Co. (2330 TT ), the world's biggest chipmaker on a made-to-order basis, fell NT$6.00, or 6.9 percent, to NT$81.50. United Microelectronics Corp. (2303 TT ), TSMC's biggest rival, fell NT$3.60, or 6.9 percent, to NT$48.90. Winbond Electronics Corp. (2344 TT ), a memory chipmaker and a made-to-order manufacturer of chips, fell NT$2.00, or 6.8 percent, to NT$27.30.

Memory chipmakers dropped. The spot price for the industry standard 64-megabit 8X8 dynamic random access memory chip fell to $5.05, down 45 percent from this year's high on Jan. 7. DRAMs are the main memory chips for computers. Mosel Vitelic Inc. (2342 TT ) fell NT$1.50, or 6.9 percent, to NT$20.40. Nanya Technology Corp. (2408 TT ) fell NT$1.90, or 7 percent, to NT$25.30. ProMos Technologies Inc. (5387 TT ) fell NT$2.00, or 5.8 percent, to NT$27.60. Powerchip Semiconductor Corp. (5346 TT ) fell NT$1.60, or 6.9 percent, to NT$21.50.

Banks fell on concerns the real level of their non-performing loans is worse than they have stated. The Ministry of Finance says banks' non-performing loans as a percentage of total loans are 4.5 percent. Still, it is in talks with foreign banks to try and get them to buy the distressed debt of local banks, suggesting the true level of bad debts is higher.

China Development Industrial Bank (2804 TT ), the biggest bank in Taiwan by market value, fell NT$1.40, or 4.9 percent, to NT$27.20. Chinatrust Commercial Bank (2815 TT ), the third- biggest bank by market value, fell NT$0.70, or 3.1 percent, to NT$21.90. First Commercial Bank (2802 TT ), the second-biggest bank by market value, fell NT$1.30, or 4.8 percent, to NT$25.70.

Computer and notebook makers slid after Apple Computer Co. said it expects a ``slight profit'' in the three months to Dec. 31 and warned sales were weaker-than-expected in September, which is usually a lucrative time for computer makers as students buy PCs before returning to school.

Acer Inc. (2306 TT ), Taiwan's largest computer maker, fell NT$2.00, or 6.8 percent, to NT$27.40. Asustek Computer Inc. (2357 TT ), a notebook maker and a computer motherboard manufacturer, fell NT$7.00, or 4.8 percent, to NT$139.00. Compal Electronics Inc. (2324 TT ), a notebook maker, fell NT$1.70, or 3.8 percent, to NT$43.50. Quanta Computer Inc. (2382 TT ), a notebook maker, fell NT$3.50, or 4.3 percent, to NT$99.50.


-- Martin Thompson (mthom1927@aol.com), October 19, 2000

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