Taiwan stocks fell 1.3 percent to a near two-month closing low on Wednesday, hurt by tech shares such as LCD maker AU as high inflation raised fears over slowing demand for new electronics products. However, shares of top contract chip maker Taiwan Semiconductor Manufacturing Co Ltd (TSMC) defied the overall weakness after the company said it may raise prices for its higher-end chips.
Taiwan's main TAIEX share index ended down 112.66 points at 8,665.73, with modest turnover of T$111.66 billion ($3.66 billion). "High oil prices will hurt corporate earnings and there's no doubt that tech demand will decline," said Alex Husng, vice president at Mega International Securities.
Higher inflation, stoked by rampant oil prices, could hurt global consumer spending on new electronics products such as computers and mobile phones. "We should be cautious now because inflation is really a concern," said Nigel Lee, a manager at National Investment Trust. Shares of LCD maker AU Optronics Corp fell 2.1 percent, pulling the broader electronics sub-index down by 1 percent.
TSMC shares rose 1.8 percent, while rival United Microelectronics Corp (UMC) was down 0.5 percent. Taiwan's state planning commission told Reuters it expects this year's consumer inflation to hit 3.08 percent, higher than its previous target, its chief said on Wednesday, a day after the cabinet decided to raise oil prices.
Taiwan announced a hike in fuel prices on Tuesday, adding inflationary pressures to the island's slowing economy. The decision marks the latest move by Asian economies, such as Indonesia and Sri Lanka, to lift fuel prices. Solar cell maker Motech Industries Inc fell 4 percent even after a local newspaper quoted the company's chairman as saying the firm expected its output to grow 40 percent next year due to robust demand globally.
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