Taiwan Likely To See Market Rebound

(RTTNews) - The Taiwan stock market has finished lower in two straight sessions and in five of the last six, surrendering support at 7,000 points and shedding 4 percent in the process. Now the Taiwan Stock Exchange is tipped to rebound firmly on Monday, possibly reclaiming the support level.

The global forecast for Monday is broadly positive, thanks to a sharp decline in the price of crude oil. Good news out of the U.S. financial sector also helped to allay concerns about the health of the world's largest economy, which was enough to send Wall Street higher. Also, many of the Asian markets are embroiled in lengthy losing streak, which may make share pries very interesting to the bargain hunters.

The TSE finished slightly lower on Friday, with losses among the food, transport and electronics stocks offset by strength from the financials and construction stocks.

For the day, the index eased 6.84 points or 0.10 percent to close at 6,911.64 after trading between 6,837.25 and 6,994.80 on turnover of 78.93 billion Taiwan dollars. There were 1,405 decliners and 620 gainers, with 447 stocks remaining unchanged.

Among the decliners, Uni-President Enterprises was limit-down 7 percent, while Cathay Financial lost 0.18 percent, Hon Hai Precision fell 1.54 percent and EVA Airways fell 3.13 percent. Bucking the trend, Kuo Yang Construction was limit-up 7 percent, while Taishin Financial surged 4.71 percent, Chinatrust Financial rose 0.75 percent, Taiwan Semiconductor Manufacturing Co (TSMC | Quote | Chart | News | PowerRating) rose 1.21 percent, United Microelectronics (UMC | Quote | Chart | News | PowerRating) added 0.43 percent and HTC Corp climbed 2.55 percent.

Wall Street offers a sharply positive lead as stocks turned in a standout performance on Friday, after a sharp drop in oil prices prompted investors to look for bargains. Strength in the financial sector also contributed to the buying interest on Wall Street.

Investors were encouraged when oil prices pulled back sharply during the day, more than offsetting the price increase in the previous session. The pullback by the price of oil was partly due to a rebound in the value of the U.S. dollar. After ending Thursday's trading up $5.62 at $121.18 a barrel, crude for October delivery closed down $6.59 at $114.59 a barrel.

Meanwhile, state-run Korea Development Bank is considering the acquisition of Lehman Brothers (LEH | Quote | Chart | News | PowerRating), according to various reports on Friday. Korea Development Bank, or KDB, reportedly said it is open to mergers or acquisitions of both domestic and foreign companies to cover up its weak areas as the Korean government intends to privatize the company by 2012.

Also, Federal Reserve Chairman Ben Bernanke spoke at the Federal Reserve Bank of Kansas City's Annual Economic Symposium in Jackson Hole, Wyoming earlier in the day, calling the current policy and economic environment "one of the most challenging" in recent memory. "Although we have seen improved functioning in some markets, the financial storm that reached gale force some weeks before our last meeting here in Jackson Hole has not yet subsided, and its effects on the broader economy are becoming apparent in the form of softening economic activity and rising unemployment," Bernanke said.

The major averages saw notable gains throughout the session, closing just below their intraday highs. The Dow closed up 197.85 points or 1.7 percent at 11,628.06, the Nasdaq closed up 34.33 points or 1.4 percent at 2,414.71 and the S&P 500 closed up 14.47 points or 1.1 percent at 1,292.19. For the week, The Nasdaq was down 1.5 percent, while the Dow and the S&P 500 posted weekly losses of 0.3 percent and 0.5 percent, respectively.

In economic news, Taiwan will on Monday provide June data for export orders, industrial output and money supply. Export orders are called higher by between 7.9 and 8.05 percent on year, down from the 9.27 percent annual expansion in June. Industrial output is expected to increase by 3.22 percent on year, easing from the 5.7 percent increase on year in the previous month. Money supply is forecast to add an annual 1.53 percent, down from the 1.7 percent increase on year a month earlier.

Also, Taiwan's GDP increased 4.32 percent year-over-year in second quarter, the Directorate-General of Budget, Accounting and Statistics said on Friday. At the same time, the statistical office said it revised the GDP growth rate of the first quarter to 6.25 percent from an initial estimate of 6.06 percent.

Taiwan's total non-agricultural payroll employment rose 0.14 percent month-on-month in June, the report added. On an annual basis, the number of payroll employees increased 102,000, or 1.67 percent in June. According to the statistical office, the average monthly earnings per employee at the industrial and service sector climbed 1.76 percentage point over the previous month and 0.86 percentage point over the year-ago period.

Finally, Taiwan on Friday cut its 2008 growth forecast as exports and consumer spending cool in the latest sign that a global slowdown is spreading across Asia. The economy now is expected to expand 4.3 percent this year, the weakest pace since 2003 and down from an estimate of 4.78 percent made three months ago, Taiwan's statistics bureau said. Growth this quarter will be the slowest in more than three years, it predicted.

On the corporate front, Cathay Financial Holding has invested $100 million in a private equity fund of the Blackstone Group LP. The investment represented 0.5 percent of the Blackstone Capital Partners VI, a recently launched private equity fund by the U.S.-based buyout firm, Cathay said in a statement late on Friday. Cathay's life insurance arm currently has $63.9 billion in its investment portfolio.

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