Taiwan stocks weaken

Taiwan stocks fell 0.36 percent on Monday to a two-week closing low, as tourism stocks like Formosa Hotel fell sharply after reports that the scale of mainland Chinese tourism was well below expectations in the first month of a landmark tourism agreement.
The main TAIEX share index closed down 25.18 points at 6,977.36, following losses on Wall Street with the Nasdaq dipping 0.63 percent in the previous session on a sharp loss by GM and a rise in oil prices. Turnover was thin at T$60.7 billion ($1.98 billion), slower than T$70.9 billion in the previous session.
"The market should continue to consolidate in the short term, and could rebound 3-5 percent. But in the long term, the market will move downwards due to the global economic slowdown," said Nigel Lee, a portfolio manager of National Investment Trust Co Ltd.
Formosa Hotel fell by its daily 7 percent limit, weighing the tourism sub-index down 5.75 percent after a report that an anemic 174 mainland tourists per day came to Taiwan in the first month of a historic tourism agreement.
"It seems that the small number of Chinese tourists isn't bringing much effect to Taiwan's tourism. And tourism shares will keep falling because their price to earnings ratio has been too high," said Lee. Taiwan Semiconductor Manufacturing Co (TSMC) , the world's top contract chip maker, and smaller rival United Microelectronics Corp (UMC) fell 0.54 percent and 1.43 percent, respectively.
TSMC and UMC recently expressed concerns over demand in the third quarter after high fuel costs and a global economic slowdown hurt consumer spending on new computers and consumer gadgets.
But Taishin Financial, the island's No 2 financial holding firm, rose 1.37 percent, boosting the broader financial sub-index 0.32 percent higher. "Financial shares rose because of recent government measures and after they have fallen a lot recently," said Lee, adding that he expected the TAIEX to trade between 6,900-7,100 points this week.
Advanced Semiconductor Engineering (ASE) fell 2.6 percent. Japan's Toshiba, the world's No 2 maker of NAND flash memory chips, denied a report on Monday that it was in talks with ASE to jointly set up a plant to assemble and test NAND memory chips in Japan. Motech Industries, Taiwan's top maker of solar cells, rose 1.52 percent. Motech posted a July sales of T$2.176 billion, its 14th-straight monthly record, local media reported.