Taiwan stocks fell 0.8 percent on Wednesday as worries over the US financial crisis weighed down shares like Cathay Financial after the US Congress wrangled over a $700 billion rescue plan. The main TAIEX share index closed 49.61 points lower at 6,132.60, after staging a rally of about 10 percent in the previous three sessions.
"The market tracked Wall Street losses. It's unclear whether the US Congress will pass the rescue plan, but investor confidence world-wide will be hit if the plan's not passed," said Karen Lin, a fund manager of Paradigm Asset Management. US shares fell on Tuesday amid concerns that congressional wrangling could delay the proposed $700 billion plan to stabilise the financial sector.
Cathay Financial, Taiwan's top listed financial holding company, ended down 5.84 percent, dragging the financial sub-index 1.84 percent lower. "The underlying problem for the Taiwan financial sector is that the US financial market wouldn't recover soon," said analyst Dexter Hsu of J.P. Morgan.
Shares of Cathay and smaller rivals, which have investments overseas, have been hit hard amid the fallout from the US subprime crisis and the collapse of Lehman Brothers. Mega Financial fell 1.95 percent, after saying it has written off T$1.9 billion against its bond investment in Lehman Brothers, with more write-downs potentially to follow by year-end.
The electronics sub-index lost 0.67 percent. Smartphone maker HTC Corp declined 2.09 percent even after T-Mobile introduced on Tuesday the widely anticipated G1 mobile phone, which is made by HTC and uses Google's new Android operating system. United Microelectronics Corp (UMC), the world's No 2 contract chip maker, gained 4.23 percent after it denied on Tuesday a report that it plans to cut its workforce and shut down older wafer factories as demand slows.
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