twn stock 22 dec

14:32 22Dec2008 RTRS-Taiwan stocks at 1-wk closing low, Hon Hai slumps

* Main index falls 3.4 percent
* Hon Hai drops after lay-off plans
* LCD shares mixed on China assistance
* Builders down for 2nd day on new accounting rule

(Adds details and quotes)
Gina Chang
TAIPEI, Dec 22 (Reuters) - Taiwan stocks fell 3.4 percent on
Monday to a one-week closing low, as Hon Hai led the market lower
after its chairman said the economic slowdown was more severe
than many people think and his company would cut its workforce.
Electronics gear maker Hon Hai <2317.TW>, the market's most
active share by turnover, slid 6.6 percent, pushing the main
TAIEX share index <.TWII> down 158.98 points to end at 4,535.54,
its lowest finish since Dec. 12.
The market gave up early gains that were inspired by major
LCD makers after China pledged over the weekend to buy LCD panels
worth $2 billion from Taiwan makers, to support the industry
during the global economic downturn. [ID:nTP49775]
"Hon Hai's lay-off plan was within expectations as the world
economy continues to worsen and as the Chinese yuan strengthens,"
said Alex Huang, vice president of Mega International Securities.
Hon Hai group said on Friday it plans to reduce its global
workforce by 3-5 percent due to a worse-than-expected slowdown,
with the group's chairman saying the worst is yet to come.
[ID:nTP281361]
Investors ignored news that China said it was willing to meet
requests for assistance from political rival Taiwan and would
also offer Taiwanese investors on the mainland $19 billion in
financing over the next three years. [ID:nN21273662]
At home, a newspaper reported on Monday the economics
ministry will put up T$5.5 billion over the next two years to
promote exports through measures such as supporting export
finance and insurance.
"China's assistance is only a short-term boost for stock
prices, the fundamentals of the economy are more important
factors in the longer term," said Wang Kao-hsiung, vice president
of KGI Securities.
"Investors' confidence is still weak, judging by light
trading volume today. We need to keep watching if investors will
chase stocks as it is an important time now to see if the stock
market could turn bullish after recent gains."
Turnover was thin at T$67.2 billion ($2.1 billion), down from
Friday's T$70.7 billion.
The electronics sub-index <.TELI> slid 2.84 percent.
AU Optronics <2409.TW>, the world's No.3 flat panel maker,
gave up earlier gains to fall 0.65 percent but smaller rival Chi
Mei Optoelectronics <3009.TW> advanced 4.93 percent.
"It's positive for LCD makers, but it's just talk for the
moment and we still don't know when China will actually buy their
products," said Nigel Lee, a portfolio manager of National
Investment Trust.
AU and Chi Mei, which had combined sales of about T$30
billion in November, are facing a global economic slowdown that
has hurt spending on computers and flat-screen TVs that use LCD
panels.
Market research firm DisplaySearch said worldwide revenues
for liquid crystal display (LCD) TVs are expected to fall for the
first time since the category was launched due to the economic
downturn. [ID:nSEO269024]
Taiwan Semiconductor Manufacturing Co (TSMC)