Taiwan shares close lower despite rally of old economy
CNATAIPEI--Taiwan shares closed in negative territory Monday despite surges in shares in the pulp and paper as well as rubber sectors on reports of potentially favorable changes in accounting rules.
October 8, 2013, 12:08 am TWN
The weighted index closed down 30.89 points, or 0.36 percent, at 8,333.66 on turnover of NT$89.33 billion (US$3.04 billion), after moving between 8,323.79 and 8,361.50.
Several companies in the rubber and pulp and paper sectors that have large real estate holdings were helped by local media reports that the Financial Supervisory Commission (FSC) plans to review the accounting rules on how such assets are valued.
According to the reports, the FSC is studying whether to allow listed companies and those traded in the over-the-counter market to value their properties according to market prices rather than based on their cost, as is the case at present.
The change could double or even triple the values of real estate assets shown on the companies' balance sheets and consequently increase the companies' net worth, said Chang Shih-tun, an assistant manager at Da Chang Securities Co.
Shihlin Paper Co., which plans to redevelop its factory site in Taipei, soared by the maximum 7 percent to NT$49.10, while YFY Inc. also rose by 7 percent to NT$16.15.
The market's sub-index for the pulp and paper sector rose 4.59 percent on the day.
Shares of Nankang Rubber Tire Corp. and Federal Corp., which have redevelopment projects in Taipei and Taoyuan, respectively, also surged on the news.
Nankang closed 5.29 percent higher at NT$38.80, and Federal gained 2.83 percent to NT$23.65. The rubber sector sub-index closed 4.26 percent higher.
The rally by these old economy stocks failed to lift the broader market, as large-cap electronics shares posted losses during the session.
Taiwan Semiconductor Manufacturing Co., the heaviest weighted stock on the Taiwan stock exchange, fell 0.96 percent to NT$103, and Hon Hai Precision Industry Co. fell 0.92 percent to NT$75.2.
Panel makers were hard hit by recent downgrades of the sector by foreign brokerage houses, with the latest warning coming from J.P. Morgan Securities because of new production lines coming on line in China next year.
Innolux Corp. plummeted 6.49 percent to NT$12.25, and AU Optronics Corp. closed 2.37 percent lower at NT$10.30.
Boryi Chien, an assistant manager in the research department of Cathay Securities Co., was bullish on the market's prospects, citing the recent buying of foreign investors and the strengthening of the Taiwan dollar against the U.S. dollar.
Taishin Securities Investment Trust Co. fund manager Wu Ying-liang also expects shares in Taiwan to rise further despite the consolidation seen on the market Monday, noting that the local market's 1.98 percent gain in September was moderate compared with the performance of other global markets.
NTD Closes at the Day's High of 29.536
The U.S. dollar rose against the Taiwan dollar Monday, gaining NT$0.034 to close at the day's high of NT$29.536. Turnover totaled US$661 million during the trading session.
The greenback opened at NT$29.500 and moved to a low of NT$29.310 before rebounding.