Taiwan Stock at lowest level since 1996 as TWSE drops below 5000

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11/19 22:40 Asian Stocks: Taiwan's TWSE Index Drops Below 5000; Japan Falls By Brett Cole

Taipei, Nov. 20 (Bloomberg) -- Taiwan's key stock index fell to its lowest in over four and-a-half years amid concerns government funds won't buy shares to boost the market. Taiwan Semiconductor Manufacturing Co. paced declines.

The TWSE Index fell 291.46, or 5.6 percent, to 4875.89, its first foray below 5000 since March 1996. Reports that prosecutors are investigating officials who run the government's stock market stabilization fund also weighed on share prices.

``There has been a total collapse in confidence,'' said Steve Chou, who helps manage $206 million in Taiwan stocks at Truswell Securities Investment Trust Ltd. ``We have depended on the power of the national stabilization fund. The selling pressure is huge because people don't think the market will rise in the short- term.''

In other markets, a two-day slide by the Nasdaq Composite Index sent Japan and Singapore lower. The Nikkei 225 stock average fell 0.6 percent, led by Furukawa Electric Co., while the Straits Times Index lost 0.8 percent, paced by Chartered Semiconductor Manufacturing Ltd. Korea's Kospi index fell 1.3 percent, led by Hyundai affiliates as the parent group makes final adjustments in its rescue plan for a debt-laden construction unit.

In Taiwan, TSMC and its rival United Microelectronics Corp. accounted for a quarter of the index's decline. TSMC, the world's biggest chipmaker on a made-to-order basis, fell 5.9 percent to NT$88.50, while UMC shed 6.5 percent to NT$50.50.

Higher chip inventories at communications equipment manufacturers fueled concerns orders from overseas will decline over the next six months as demand for chips fails to keep pace with expectations. TSMC vice president F.C. Tseng said TSMC's computer wafer production capacity may not be fully utilized in 2001, the Commercial Times reported on Friday.

``TSMC has had demand problems since the beginning of the third quarter,'' said Shih Mei, who manages $25 million of Taiwan stocks at National Investment Trust Ltd. TSMC's ``operating capacity has already peaked.''

Separately, Taiwan prosecutors are concerned some of the stabilization fund's managers may have told traders at investment banks the fund's strategies, the China Post reported yesterday, without citing sources.

They are targeting the main buyers and sellers of stocks on Thursday when the TWSE index slumped 4.9 percent, causing the fund to lose between NT$400 million ($12 million) and NT$600 million, the newspaper reported.

In the last five days, the TWSE Index dropped more than 15 percent in U.S. dollar terms, making it the world's worst- performing index.


Japan's Nikkei 225 stock average shed 87.83 to 14,456.47. The broader Topix index fell 0.8 percent to 1369.18. Furukawa Electric, Japan's second-largest makers of cables and fiber-optic parts, fell 3.2 percent to 2,700 yen.

Last week, lower-than-expected earnings and a sales warning from Hewlett Packard Co., the No. 2 computer maker in the U.S., and Dell Computer Corp., the No. 1 U.S. personal-computer maker, reinforced worries global demand for computer-related products is slowing. The Nasdaq fell for a second day on Friday, extending its slump to 5 percent during the period.

``Everybody knows the U.S. economy is slowing but the concern is how fast the slowdown will be and its impact on demand for Japanese goods,'' said Shinichiro Takaya, general manager at Mizuho Financial Securities Co.'s equity department. ``Investors are buying defensive stocks with steady earnings growth.''

NTT Data Corp. declined 3.1 percent to 903,000 yen after the subsidiary of Japan's largest phone company said operating profit probably declined 3.4 percent to 49 billion yen ($47 million) for the year ending March 2001 because of increased competition.

Kyocera Corp. fell 0.8 percent to 14,550 yen. The world's leading maker of ceramic microchip packages used to protect finished chips used in telecommunications devices is due to report first-half earnings at 4 p.m.


Singapore's Straits Times Index fell 15.88 to 1937.66. Chartered Semiconductor, the world's No. 3 maker of chips to companies' design, dropped 2.8 percent to S$6.90. Omni Industries Ltd., Singapore's third-largest contract electronics manufacturer, lost 1.7 percent to S$3.40. ST Assembly Test Services Ltd., a tester and assembler of semiconductors, fell 1.3 percent to S$3.11.

``Judging by what's happening in the U.S., one would expect orders to eventually impact the expectations here,'' said Anthony Muh, who helps manage $2 billion in Asia excluding Japan for SSB Citi Asia in Hong Kong. ``Although we haven't seen that yet, it's only a matter of time when that comes through.''


Korea's Kospi shed 7.10 to 544.16, bringing its three-day loss to 2.4 percent. Affiliates of Hyundai Engineering & Construction Co. fell as their parent Hyundai Group completes a plan to bail-out the contractor unit.

``Hyundai Group knows it will have to come up with measures to bail out Hyundai Engineering,'' said Han Sang Soo, who manages $483 million in assets at Daehan Investment Trust Co. ``Their affiliates may not want to bind their fate to Hyundai Engineering, but they will in the end come up with various ways to help out.''

Han said Hyundai affiliates may halt their slide in mid-week as the Hyundai Group lays out its plans to meet the government's deadline today.

Yonhap News said Hyundai Engineering was trying to convince Hyundai Merchant Marine Co. to buy its 170-billion-won ($149 million) headquarters building.

Hyundai Heavy Industries, which rejected the parent's proposal that it buy the headquarters, shed 0.3 percent to 18,650 won. Hyundai Motor Co., whose chairman agreed to help bail out former affiliate Hyundai Engineering , saw shares decline 2.6 percent to 13,100.


-- Carl Jenkins (somewherepress@aol.com), November 20, 2000


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-- Guy Daley (guydaley@altavista.com), November 20, 2000.

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