Taiwan Stocks Drop Most in 2 Months; Hon Hai, Quanta Fall

By Chinmei Sung

Jan. 8 (Bloomberg) -- Taiwan stocks declined the most in two months, led by electronics companies such as Hon Hai Precision Industry Co. after the island’s exports fell by a record in December.

Quanta Computer Inc. and Compal Electronics Inc., the world’s two biggest laptop makers for other companies, also dropped after Intel Corp. reported a wider-than-expected revenue decline. Intel, the world’s largest chipmaker, said fourth- quarter sales dropped 23 percent, more than it projected, as the global recession hurt computer demand.

Taiwan’s Taiex index tumbled 254.05, or 5.3 percent, to 4,535.79 at the close of trade in Taipei, the biggest decline since Nov. 6. The gauge lost 1.2 percent this year after tumbling 46 percent last year, the biggest annual drop in 18 years.

“The export figure was a big surprise on the downside,” said Eric Yao, who helps manage $152 million funds at Truswell Securities Investment Trust Co. in Taipei. “The central bank’s unexpected rate cut highlights that economic conditions may be much worse than the market thought.”

Hon Hai, the world’s largest contract maker of electronics with clients including Apple Inc. and Nokia Oyj, lost NT$4.90, or its 6.9 percent daily limit, to NT$66.30.

Taiwan’s exports slumped by a record 42 percent in December, the Ministry of Finance said yesterday, on weaker demand from the U.S. and China for laptops, mobile phones and computer chips. The central bank slashed its benchmark interest rate to 1.5 percent from 2 percent yesterday, the lowest since 2004 after plunging exports added to signs the economy is in a recession.

‘Profit Warning’

Quanta dropped 5.5 percent to close at NT$33.40, the lowest since Oct. 29. Compal slipped 6.8 percent to NT$17.15, the lowest since Dec. 30.

Intel said yesterday revenue in the three months ended Dec. 31 fell to $8.2 billion from $10.7 billion a year earlier. The chipmaker had forecast sales of about $9 billion in November.

“Intel’s case will trigger a series of profit warnings among hardware makers and should terminate the recent bear- market-rally,” Calvin Huang, a technology analyst at Daiwa Institute of Research Ltd. in Taipei, wrote in an e-mail today, pointing to a brief rebound amid a prolonged slump in prices.

The following stocks were among the most active in Taiwan today.

China Steel Corp. (2002 TT) lost NT$1.20, or 4.8 percent, to NT$23.85. Taiwan’s largest maker of the metal plans to close a furnace for 60 days in May, earlier than its original schedule for late in the third quarter, the Commercial Times reported today, citing president Chen Yuan-cheng.

Formosa Petrochemical Corp. (6505 TT) declined NT$3.20, or 4.6 percent, to NT$67 after Taiwan’s only publicly traded oil refiner said December unconsolidated revenue declined 61 percent to NT$30.8 billion.

Nan Ya Plastics Corp. (1303 TT) lost NT$1.60, or 4.2 percent, to NT$37 after the world’s largest processor of plastics for pipes and imitation leather said December unconsolidated revenue fell 57 percent to NT$9.9 billion.

SinoPac Financial Holdings Co. (2890 TT) dropped 44 cents, or 6.2 percent, to NT$6.64 after the financial services firm posted an after-tax loss of NT$3.6 billion for 2008, or loss of 51 cents per share, compared to the NT$2.5 billion profit, or 36 cents per share, it reported the year before.

Winbond Electronics Corp. (2344 TT) tumbled 23 cents, or its 7 percent daily limit, to NT$2.13 after the maker of computer-memory chips posted a 43 percent drop in December sales to NT$1.1 billion.

To contact the reporter on this story: Chinmei Sung in Taipei at csung4@bloomberg.net.