Taiwan stocks end at five-week low

Taiwan stocks fell 0.82 percent on Thursday to a five-week closing low as political uncertainty triggered selling among investors, with Chinatrust Financial leading financial shares lower. The main TAIEX share index finished 55.35 points lower at 6,733.23, the lowest since July 14.
Turnover was light at T$89 billion ($2.7 billion), slightly better than Wednesday's T$71 billion. Investors were also cautious before the release of second-quarter GDP data by the government after the market's close on Thursday. Chinatrust Financial, the second most active stock by volume, shed 3.68 percent after the top credit card issuer said it would likely pull out of a bid for AIG Taiwan insurance unit as its partner, Bain Capital, wants to exit the race.
"Political factors prompted foreign investors to pull out from the Taiwan market," said Alan Tseng, a vice-president of Capital Securities. Several Taiwan officials, including the defence minister, have offered to quit over criticism that the government was too slow in its response to Typhoon Morakot, which may have killed as many as 500 people.
"But local investors seized the opportunity to scoop up technology shares, as most of them bet on a turnaround for the sector in the second half of the year," Tseng said. Chinese stocks bounced back from a 4 percent loss in the previous session on Thursday, which helped to curb the main TAIEX's fall.
"A rebound in Chinese stocks restored some confidence in the market, but people are not completely off their guard," said Tseng. A Reuters poll showed Taiwan's economy in the second quarter probably shrank by 7.5 percent from a year earlier, easing from a record fall in the first quarter with the help of an improvement in exports. The banking and insurance and sub-index dropped 2.11 percent, with shares of Shin Kong Financial, parent of Taiwan's No 3 insurer, dropping 3.17 percent before the firm's second-quarter investor conference after market close.
The broader electronics sub-index, which edged down 0.22 percent, was more resistant to the fall as Asian electronics makers are forecasting a turnaround in the second half of this year on a pick-up in global demand. Smartphone maker HTC Corp dropped 1.33 percent after a local newspaper reported that AT&T had cancelled plans to launch an HTC smartphone model named Lancaster in the second half of this year.