Taiwan stocks seen steady before second quarter results

Taiwan stocks are expected to trade in a narrow range this week, with an eye on major US tech firms that report quarterly earnings, after many Taiwan tech hardware companies posted weak June sales.
Taiwan's main share index was near flat last week, ending at 5,777.72 points, as daily turnover dipped to a 13-month low on Tuesday. Analysts said a cautious mood will keep the index trapped between 5,700-5,900 this week.
The index is up 5.4 percent from the year's trough in mid-May but has fallen about 10 percent since Beijing moved to cool its overheating economy in late April.
"In addition to second-quarter results, people will pay attention to what companies say about the third quarter, so sentiment is very cautious now," said Alex Huang, assistant vice president at Barits International Securities.
Taiwan companies are key suppliers to big names such as Intel Corp and Apple Computer Inc, which will announce quarterly results this week. But some investors already took advantage of recent weakness to buy Taiwan Semiconductor Manufacturing Co (TSMC) and United Microelectronics Corp (UMC), the world's two largest contract chipmakers, on their solid June sales.
On Friday, shares in TSMC finished up 2.22 percent at T$46.00 and those of UMC jumped 2.1 percent to T$24.30.
Despite the rises, some analysts still fret that the highly cyclical microchip industry is peaking because some foreign investment banks have expressed bearish views on TSMC and UMC, and the third-quarter earnings of sector giant Intel.
Investors also snatched up display screen makers like AU Optronics Corp and Chi Mei Optoelectronics Corp on Friday, recovering somewhat after the sector was hurt by concerns over weaker demand for flat-screen computer monitors and televisions.
Deutsche Bank last month downgraded its ratings on the two screen makers, citing expectations of weaker demand in the coming months.
AU and Chi Mei had each fallen 17 percent and 21 percent since early June.
Weak June sales fuelled concern that the peak export season in the second half will be disappointing.
Sales at companies such as Quanta Computer Inc, AU and Chi Mei were flat or down from May, in contrast to the historical trend of rising sales at this time of year.