TW market 1202

14:32 02Dec2008 RTRS-Taiwan stocks fall 3.6 pct as TSMC slides

* Market tracks Wall Street losses in thin trade
* TSMC drops 7 pct after cutting sales forecasts
* Financials sink despite talk of gov't bailout

(Adds details, quote)
By Gina Chang
TAIPEI, Dec 2 (Reuters) - Taiwan stocks fell 3.6 percent on
Tuesday, tracking heavy losses on Wall Street and as chip
bellwether TSMC <2330.TW> slid after the company cut its sales
and margin forecasts for the current quarter.
The main TAIEX share index <.TWII> ended down 161.45 points
at 4,356.98, after a Wall Street plunge on Monday saw the major
indexes drop more than 7 percent.
Turnover was thin at T$54 billion ($1.6 billion), down from
T$66.9 billion a day earlier.
"News of TSMC's forecast cut triggered a heavy sell-off in
tech shares today," said Nigel Lee, a portfolio manager at
National Investment Trust Co Ltd.
"We recommend investors reduce their holdings of tech shares
in the short term as visibility for technology companies won't be
clear for the next one to two quarters," said Lee, who expected
the TAIEX to trade between 4,200-4,500 points this week.
Taiwan Semiconductor Manufacturing Co (TSMC) , the
world's top contract chip maker and the market's most active
stock by turnover, fell by its 7 percent daily limit after
cutting its fourth-quarter sales and profit margin forecasts, due
to weaker shipments amid a global slowdown. [ID:nTP242959]
TSMC's smaller rival United Microelectronics Corp (UMC)
<2303.TW> also ended limit-down and other memory chip
shares lost ground, dragging the semiconductor sub-index <.TSII>
6.41 percent lower.
Cathay Financial <2882.TW>, the island's largest listed
financial holding firm, fell 5.65 percent, pushing the financial
sub-index <.TFNI> down 4.33 percent.
Financial shares ignored local reports that the Taiwan
government could consider a bailout proposal for the sector.
Taiwan's Financial Supervisory Commission Chairman Sean Chen
said on Monday the government may consider a plan to help banks
issue debt that would be bought by the government, local media
reported on Tuesday.
"This plan will be positive for financial institutions, but
the effect won't be great," said Karen Lin, a fund manager of
Paradigm Asset Management.
"What financial firms are more concerned about is that they
might not be able to get their money back if more companies, such
as DRAM makers, fail."
Taiwan's DRAM chip makers have been licking their wounds from
over one year of heavy losses caused by tumbling chip prices and
sluggish demand.
Taiwan's government has recently loosened loan and payment
conditions to help cash-strapped firms, partly on fears that
their local lenders could feel ripple effects from any failures.

--------------------TAIEX IN PERSPECTIVE--------------------
Move on day -3.57 percent
Close on day 4,356.98
2008 intraday high 9,309.95
2008 intraday low 3,955.43
All time high 12,682.41 12 FEB 1990
------------------------------------------------------------
For a table of foreign trading in Taiwan stocks, double-click
on [ID:nTP170358]
(US$1=T$33.5)
(Reporting by Gina Chang; Editing by Jonathan Hopfner)
((gina.chang@thomsonreuters.com; +886 2 2508-0815; Reuters
Messaging:gina.chang.thomsonreuters.come@reuters.com))
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