Taiwan stocks fell 0.33 percent to a new five-month closing low on Monday as investors pocketed profits from early gains, led by financial shares despite the government announcing a series of measures to prop up the market. The main TAIEX share index fell 25.22 points to close at 7,523.54, its lowest close since January 31. The day's fall extended Friday's 3.37 percent slump.
Turnover fell to T$90.29 billion ($2.97 billion) from T$122.48 billion on Friday even though analysts say state funds were seen buying some financial and tech shares to boost sentiment. "Besides buying by government funds, the effect of the government measures to support the market remains to be seen," said Alex Huang, vice president of Mega International Securities Co.
Huang expected the TAIEX to trade between 7,300-7,850 points this week. Four big government funds are preparing to boost their stock holdings by T$300 billion in a bid to prop up the sagging market, the Chinese-language Commercial Times reported on Monday.
Shares of Cathay Financial, the island's largest financial holding firm, ended down 3.23 percent, pulling the banking sub-index down 0.52 percent. The losses came despite news that Taiwan will allow 14 financial firms to offer exchange services in China's currency, the yuan, to tap an expected surge in demand after the signing of a landmark tourism deal with China. The broader electronics sub-index was almost flat and the semiconductor sub-index edged up 0.14 percent.
"Most tech companies might report poor June sales or second-quarter earnings next month," said Chiang Chen-sheng, manager at Masterlink Investment Advisory. Chiang was referring to the impact of inflationary pressure rooted in high oil prices on tech demand. The world's top contract chip maker, Taiwan Semiconductor Manufacturing Co Ltd (TSMC) rose 1.56 percent while its smaller rival United Microelectronics Corp (UMC) fell 0.31 percent. Both companies are set to report June sales next week.
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