Taipei shares lower in early trade on currency falls despite MSCI changes

TAIPEI (AFX-ASIA) - Share prices were lower in early trade as the local currency weakened after the changes announced by MSCI for its provisional index series, dealers said. 

	    The Taiwan dollar failed to hold at 33.000 against the U.S. dollar after a report over the weekend that Taiwan Research Institute has proposed to Vice President Annette Lu to allow a depreciation to 38.00 or even 40.00 against the U.S. dollar in order to stimulate the economy.

	    Former President Lee Teng-hui is honourable chairman of the Taiwan Research Institute.

	    The MSCI announcement did not have that much of an impact since it was largely in line with expectations.

	    In the announcement, Taiwan's weighting in EMFI was increased by 0.73 percentage points while in the ACWI it was reduced by 0.25 points, with constituents increased to 91 companies from 63.

	    At 10:50 am, the weighted index was down 128.69 at 4,982.92.

	    The Taiwan dollar was at 33.176 against the U.S. dollar, down from previous close of 32.948.

	    "The sharp declines in the local unit triggered fears of capital outflows and negatively affected the equity market on concerns of losing momentum," Daiwa SBCM Cathay Securities Co Ltd assistant general manager Frank Lin said.

	    In addition, there are no major positive fresh leads to prop up confidence towards the local economy although some investors may be pinning hopes on government support while President Chen Shui-bian is overseas for the next two weeks.

	    However, Lin said he does not expect that to be much of a factor.

	    TSMC lost 1.00 twd to 89.50 as its weighting in MSCI EMFI is to be reduced to 14.52 pct from 19.87 pct, Cathay Life Insurance fell 1.00 to 44.20 with its weighting cut to 3.06 pct from 4.89 pct, and China Development Bank lost 0.60 to 27.30 as it was cut to 1.75 pct from 3.52 pct, he said.

	    Among 33 new MSCI constituents, Compeq lost 2.50 twd to 96.00, VIA Technologies fell 7.00 to 281.00 and Macronix shed 1.50 to 41.30.

	    Chunghwa Telecom shed 3.00 twd to 64.50 on disappointment that it was not included in the new MSCI indices.

	    Taiwan Pulp was down 0.13 twd at 3.63, Chung Hwa Pulp dropped 0.10 to 8.90, Lien Hua added 0.10 to 7.35, Federal Corp lost 0.25 to 8.00 and Ever Fortune dropped 0.09 to 1.91 after they were dropped from the MSCI indices.

Related stock : (NIL)