Taipei shares close lower as MSCI concerns offset rate cut, Chen proposal

TAIPEI (AFX-ASIA) - Share prices closed lower in thin trade, with investors sidelined by uncertainty ahead of Morgan Stanley Capital International's announcement of indice adjustments tomorrow, dealers said.

	    This uncertainty offset the positive impact of yesterday's rate cut, President Chen Shui-bian's proposal to form a coalition government after the yearend parliamentary elections, the SFC's relaxation in foreign investors' qualification requirements and a firmer Wall Street overnight, they added.

	    The central bank cut rates by 25 basis points, against expectations of a 12.5 point cut, while the cut in the uncollateralised accommodation rate by 3.625 percentage points to 6.0 pct surprised the market, dealers said.

	    The reduced turnover indicated the market's uncertainty over changes to the MSCI index constituents and over any further government measures when Chen travels overseas between May 21 and June 5.

	    The weighted index closed down 31.77 points or 0.62 pct at 5,111.67, off an opening high of 5,180.99 and a low of 5,094.58. 

	    Volume was 1.48 bln shares worth 46.47 bln twd. 

	    Decliners led risers 401 to 118, with 69 stocks unchanged. 

	    Eight stocks closed limit-up and 25 limit-down.

	    The financials, paper, cement, food and construction sectors were down 3.22 pct, 1.52 pct, 1.42 pct, 1.35 pct and 0.79 pct.

	    The petrochemicals and textiles sectors were up 0.46 pct and 0.43 pct.

	    The electronics sector was unchanged. 

	    The Taiwan dollar closed the morning session at 32.939 against the U.S. dollar, from yesterday's close of 32.952.

	    "The President today just gave an outline for a coalition government, but there was an absence of detailed measures," Fubon Securities Investment Service Corp manager Norman Lee said.

	    The central bank's easing in monetary policy did not prove to be much of an encouragement for investors either, he said.

	    "It is not liquidity that the local bourse has a problem with ... the cautious tone results from concerns over prospects on the economic and global front which need far stronger measures to be reversed to positive."

	    Investors are still about the economic outlook, he said.

	    "There were still downside risks for industries and worries over unemployment and consumption," Lee added.

	    TSMC closed up 1.50 twd at 90.50 and UMC added 0.50 to 52.00 on firmer ADRs.

	    Taiwan Cellular rose 2.30 twd to 41.80 on unit Taiwan Fixed Network Co Ltd's decision to bid for 429 mln parent shares. Taiwan Cellular stakeholder Pacific Electric was flat at 9.80 twd.

	    Acer Sertek was unchanged at 50.50 twd following a report on prospects for a recovery in sales from May and of a gross margin of over 10 pct for the year.

	    Formosa Plastics rose 0.70 twd to 38.30, Hwa Nan Commercial Bank lost 1.10 to 20.60 and Yulon Motor dropped 0.50 to 16.70 after its AGM approved the 2000 dividend.

	    First Commercial Bank dropped 1.20 twd to 20.00 after announcing its decision to form a securities house.

	    Evergreen Marine lost 0.30 twd to 16.60 despite reporting gains from a property sale.

	    Wei-Chuan fell 0.25 twd to 9.40 after deciding to defer its AGM.

	    Yuanta Core Pacific fell 0.40 twd to 23.60 after the group's move to buy 9.5 pct in Singapore-based Kim Eng Holdings.

	    Elitegroup rose 1.00 twd to 101.50 and Accton was unchanged at 35.80 after going ex-dividend.

Related stock : (NIL)