Taiwanese ADRs hit by China warning
By Ciara Linnane, CBS.MarketWatch.com
Last Update: 2:44 PM ET May 17, 2004
NEW YORK (CBS.MW) -- U.S.-listed shares of Taiwanese companies traded sharply lower Monday, catching up on losses made in their home market after China repeated a vow never to accept independence for the island of 23 million people.
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The official Xinhua news agency carried a message from the Chinese government overnight, stating that relations with Taiwan were being "severely tested," AFX News reported.
The office for Taiwan affairs warned that President Chen Shui-bian and his government are pushing the island toward the "brink of danger," and vowed to crush "at any cost" any move towards independence.
The statement comes just days before President Chen is sworn in for a new four-year term. Taiwan's Weighted Average closed down 5.1 percent as the statement compounded concerns about high oil prices and the Monday assassination of the head of the U.S.-appointed Iraq Governing Council in Baghdad.
In New York, major issues fell across the board. Taiwan Semiconductor (TSM: news, chart, profile) skidded 4.5 percent at $9.00, while United Microelectronics (UMC: news, chart, profile) was down 5.2 percent at $4.39 and Advanced Semiconductor (ASX: news, chart, profile) lost 2.4 percent. Computer-screen maker AU Optronics (AUO: news, chart, profile) was down 4.4 percent.
Siliconware Precision (SPIL: news, chart, profile) was down 5.5 percent at $3.25 on double its average daily volume. Chunghwa Telecom (CHT: news, chart, profile) was down 3.5 percent at $15.92.
The Taiwan Fund (TWN: news, chart, profile), which invests in stocks listed on the Taiwan Stock Exchange, was down 5.1 percent at $10.43.
The latest rancor between the mainland and Taiwan comes at a time when investors are worried about the impact in other Asian and Western markets of China's efforts to cool off its economy.
In a note to clients Monday, analyst Donald Lu at Goldman Sachs said a recent visit to Chinese companies and government agencies has relieved his concerns that tightening economic policy would unduly affect the build-up of high-tech facilities.
Goldman believes that the Beijing government is sponsoring a start-up, Super Power Semiconductor, to build a 200mm foundry based in Beijing for the production of integrated circuits to be used in automobile applications, said Lu.
"While we believe TSMC's book-to-bill ratio is close to historical highs and that the foundry's business should remain healthy in 2004, the visit has made us more concerned about any further deflationary impact from China on TSMC, UMC and Siliconware Precision," he said.
Goldman is sticking with an "outperform" rating on Taiwan Semi and United Micro and with an "in-line" rating on Siliconware.
Ciara Linnane is markets editor for CBS MarketWatch in New |
