Chen speech unlikely to stir Taiwan stocks

Taiwan stocks are expected to take a breather this week after rising to a four-month high, as President Chen Shui-bian failed to announce concrete measures to improve ties with China in a National Day speech.
While record-high oil prices remain a concern, analysts saw a limited downside for the market as foreign fund managers were expected to step up buying shares ahead of a weighting upgrade by Morgan Stanley Capital International (MSCI) next month.
Led by financials after a September 30 rate hike, Taiwan's TAIEX share index climbed to a four-month closing high last Thursday. The index rose 2.6 percent last week to 6,102.16, its third straight week of gains.
Investors had chased transport shares such as China Airlines Ltd, the island's top carrier, and shipping firm Evergreen Marine Corp as they bet Chen may try to ease tensions with China, a move investors hope could lead to direct transport links.
Chen's only mention of direct transport was a reference to the cabinet's efforts to draft rules on direct chartered flights, calling on China to open talks on the details.
Shares in China Airlines have risen 11 percent and those of Evergreen Marine were up 5.1 percent so far this month.
Financial shares such as Chang Hwa Bank and Cathay Financial Holding could gather steam on hopes they will benefit as the MSCI reweighting could bring in billions of dollars from foreign fund managers - gains that should help support the TAIEX at 6,050 points, analysts said. Chang Hwa Bank closed up 0.95 percent at T$21.30 on Friday. Cathay rose 1.53 percent to T$66.50.
Local shares would first be weighted at 75 percent capitalisation beginning next month, up from the current 55 percent, to reflect Taiwan's deregulation of foreign investment rules. They would be fully weighted by the end of next May. Foreign investors have been big buyers recently and accumulated a net T$3.16 billion of local shares on Friday.
However, microchip heavyweights Taiwan Semiconductor Manufacturing Co (TSMC) and United Microelectronics Corp (UMC) will be under pressure amid concern over slower demand in Q4.
Also casting a shadow on the tech sector was news that Samsung Electronics Co Ltd's third-quarter operating profit would be about 10 percent below market forecasts.