Taipei shares outlook: Lower after FOMC cut, Philips warning

TAIPEI (AFX-ASIA) - Share prices are expected to open lower in the wake of Wall Street's heavy losses after the FOMC interest rate cut of 50 basis points was lower than market expectations.	    In addition, Royal Philips Electronics' warning yesterday on first quarter semiconductor sales will further damage sentiment towards the chip industry, although they said local semiconductor manufacturers' shares prices are already at very low levels.	    The two merger plans announced yesterday -- between Teco and Sampo, and between UMC unit World Wiser and UniMicron -- is expected to trigger interest in these stocks but not to boost the broad market, they said. 	    Yesterday, the weighted index closed up 0.81 points at 5,642.70 on turnover of 77.08 bln twd. 	    Foreign institutions were net sellers of shares worth 738.78 mln twd, local investment trusts net sellers of 337.88 mln twd and brokers net sellers of 426.68 mln twd.	    "A FOMC rate cut of 50 basis points rather than the market's hopes for 75 points actually suggests that the Fed does not expect the U.S. economy to be as bad as some investors earlier speculated," Truswell Securities Investment assistant vice president Michael Hsu said.	    Nonetheless, the local market will at first negatively respond to disappointment over the scale of rate cut, he said.	    He said the Philips warning has confirmed the weak prospects for the global chip industry and will negatively affect the sector.	    However, the impact may not be that strong as such a warning was not unexpected, coming as it does on the heels of profit warnings by other chip manufacturers.	    News today that Chunghwa Telecom will further cut telephone fees is seen as dampening sentiment towards the telecoms sector on expected lower gross margin for the company.

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