Taiwan stocks fell 1.82 percent on Friday, with AU Optronics Corp leading technology shares lower after the island's top LCD maker forecast lower screen prices. The main TAIEX share index closed down 134.46 points at 7,233.62, ending a two-day rally that saw it close at a three-week high the previous session. The index has finished up 6 percent on the week.
Taiwan's electronics sub-index dropped 1.78 percent, dragged by AU Optronics, whose share price shed 4.36 percent after it predicted weak LCD prices in the current quarter and said it was scaling back production. "If other companies in the LCD sector follow AU in cutting production, their losses in the second half will not be large.
But whether product prices will go up depends largely on future demand," said Karen Lin, a fund manager at Paradigm Asset Management Co Ltd. Shares of Chi Mei Optoelectronics Corp, Taiwan's No 2 LCD maker, fell 4.4 percent. Lin expects the TAIEX to trade between 7,000-7,600 points next week.
"The negative US housing report triggered worries for the local tech sector that demand from the US would slow down as consumption is weakening," said Vincent Ho, a fund manager at JF Asset Management. The US National Association of Realtors showed on Thursday that June sales of existing homes hit a 10-year low, sending Wall Street more than 2 percent lower. Memory chip makers Powerchip and Nanya Tech fell 3.87 percent and 4.29 percent, respectively.
Their losses came after the sector leader, South Korea's Samsung Electronics Co Ltd, posted a lower-than-expected second-quarter profit on Friday, facing a tough second half with a sluggish chip market and lower margins in flat screens and mobile phones. Cathay Financial, the island's largest financial holding firm, dropped 3.58 percent, and the broader financial sub-index slid 3.25 percent.