Taipei shares outlook: Lower on Wall St/economic concerns

TAIPEI (AFX-ASIA) - Share prices are expected to open lower, with sentiment further hit by heavy losses on Wall Street overnight which will only increase concerns about the economic outlook both locally and abroad,dealers said. They said Ericsson's profit-warning will add to the negative tone, followoing on from those of Cisco Systems and Intel, while the losses seen in Tokyo this morning will increase the sense of uncertainty. The electronics sector in particular will come under pressure from NASDAQ's fall to below 2,000 points while the Ericsson warning will undermine local telecoms and contract manufacturers. Yesterday, the weighted index closed down 97.76 points at 5,582.67 on turnover of 70.76 bln twd. Foreign institutions were net sellers of shares worth 2.72 bln twd, local investment trusts net sellers of 1.46 bln twd and brokers net buyers of 203.31 mln twd. The Cisco Systems warning hit NASDAQ much more seriously than was expected by local investors yesterday, Jih Sun Securities Investment Consulting Co Ltd manager Cooper Leow said. Leow said sentiment is now very fragile, with a slide on NASDAQ to 1,800 points looking imminent. "Weak demand and an inventory correction will continue to overshadow the electronics sector, while the NASDAQ falls trigger fears of a prolonged downturn in the industry." The announcement late yesterday on the merger of Bank of Taiwan, Land Bank of Taiwan, Central Trust of China is unlikely to provide much of a lead in current circumstances, with the news largely as expected. At the same time, there may be some unease at the decision to have banks report NPL levels on a quarterly basis rather than each month. "Such a move can only spark skepticism about what those banks might be hiding," Leow said. He said any further contraction in turnover will suggest that investors are exiting the market and "we probably won't be able to see (any recovery to) 6,000 points for a while."

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