Taiwan stocks fell 0.83 percent on Thursday in light trading, hitting a 1-1/2-month closing low, with DRAM maker Powerchip sliding ahead of the outcome from bond negotiations with investors later in the day. The main TAIEX share index closed 51.38 points lower at 6,144.53, paring early gains to touch its weakest finish since April 30 and posting losses for the fifth straight session.
Turnover was thin at T$94.9 billion ($2.9 billion), lower than Wednesday's T$99 billion as sentiment remained cautious following a sharp pullback over the past few weeks, which made the TAIEX one of the world's worst performers so far in June. Investors have been booking profits on concerns over the local market's momentum after months of rally. Despite the day's decline.
The TAIEX was still up 34 percent so far this year. Powerchip, Taiwan's biggest DRAM chipmaker, shed 7 percent to its daily limit on concerns over the company's negotiations on its convertible bond with investors. "Powerchip's bond plan will likely be resolved after the ProMOS' precedent. It also has enough funds to help support itself," said Bevan Yeh, a senior fund manager of Prudential Financial Securities Investment Trust. The DRAM maker on Wednesday said a majority of investors holding its convertible bond had accepted its offer to reset the terms of the bond that would mature later on Wednesday.
In April, ProMOS, Taiwan's No 3 DRAM firm, secured a T$2.98 billion loan from a banking consortium after having expected the funds for months to help pay off its convertible bond that was issued five years ago.Shares of ProMOS declined 4.5 percent, lagging a 0.68 percent rise of the broader semiconductor sub-index.
Uncertainty over Powerchip's bond repayment plans further weighed on the financial sub-index, which closed the session 1.6 percent lower. Cathay Financial, the island's biggest listed financial holding firm, lost 1.3 percent. Far EasTone, one of Taiwan's top three mobile carriers, fell 0.39 percent, despite saying on Wednesday that it hoped to complete its controversial sale of a 12 percent stake to China Mobile by early next year.
Separately, China Mobile, China's dominant mobile carrier, on Thursday said it has no intention of taking control of Far EasTone if its controversial purchase plan was approved. However, Taiwan Semiconductor Manufacturing Co (TSMC), the world's top contract chipmaker, rose after saying it intends to hire 30 percent more R&D engineers as part of its effort to move up the technology ladder. TSMC shares jumped 1.4 percent, outperforming the electronics sub-index's 0.39 percent decline.