twn stocks 1219

14:32 19Dec2008 RTRS-Taiwan stocks end flat on new rules; DRAM makers up

* Wall St fall, new accounting rule weigh on TAIEX
* Top 3 DRAM shares jump on report of rebound in chip prices
* Construction, LCD shares sink

(Adds details and quote)
By Gina Chang
TAIPEI, Dec 19 (Reuters) - Taiwan stocks ended flat on Friday
as Wall Street losses and a new local accounting rule hurt
sentiment, offsetting strong gains in DRAM makers like Powerchip
<5346.TWO> due to rebounding chip prices.
The main TAIEX share index <.TWII> inched down 0.01 percent,
or 0.29 points, to close at 4,694.52, ending a four-session
winning streak and curbing the week's gain to 5 percent.
Turnover was T$70.7 billion ($2.2 billion), higher than
T$62.1 billion in the previous session.
Taiwan's top financial regulator said on Thursday a stricter
accounting rule to tighten the booking of inventories, which
investors anticipated would be put off beyond 2009, would come
into effect next year. [ID:nTP257808]
Some analysts said the new rule could hurt corporate earnings
in the current economic slowdown, while about two-thirds of
Taiwan's listed companies surveyed by the financial regulator
said the new rule would not affect them significantly.
"Shares of some traditional manufacturing companies and tech
companies that have high inventories were affected by the rule,"
said Eddy Chen, vice president of National Investment Trust.
The construction sub-index <.TCOI>, the biggest drag on the
market, shed 3.54 percent, with Cathay Real Estate <2501.TW>
dropping 3.33 percent. The cement sub-index <.TCII>, another
sector where companies have higher stockpiles, fell 2.27 percent.
LCD shares also bore the brunt, with AU Optronics <2409.TW>,
the island's top flat panel maker, sliding 3.74 percent. Its
smaller rival Chi Mei <3009.TW> was 0.98 percent lower.
One bright spot was DRAM shares, which got a boost from a
local newspaper report on Friday that spot prices of mainstream
DRAM chips surged more than 18 percent on Thursday following
recent production cuts by major players.
Shares of Powerchip Semiconductor, Taiwan's top DRAM maker,
and smaller rivals Nanya Technology <2408.TW> and ProMOS
<5387.TWO> all surged by their daily 7 percent limit.
The electronics sub-index <.TELI> gained 0.16 percent.
Hynix Semiconductor <000660.KS>, the world's No. 2 memory
chip maker, said on Thursday it was planning to cut its
production of computer memory chips by 20 to 30 percent starting
in late December. [ID:nSEO247756]
Nanya Tech is evaluating plans to ask for government
assistance as its net value could fall below T$5 per share by the
end of this year or in 2009, another local newspaper said on
Friday.
"DRAM stocks' rebound will be short-lived. The sector is in
very bad shape and there is no sign that these companies are
coming out from the bottom," said Chen.
The recent gain in the Taiwan dollar also provided support to
stocks. The Taiwan dollar ended at a two-month high on Thursday
before easing slightly on Friday.
"The Taiwan dollar has been rising recently and it's positive
for the market because more foreign investors will enter," said
Kevin Yang, president of Paradigm Asset Management.
Foreign institutions were net buyers of local shares for the
past four sessions, taking the month's net buying to T$24 billion
so far.

HOT STOCKS
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sale target could hit about 2.5 million units next year.
---------------------TAIEX IN PERSPECTIVE--------------------
Move on day -0.01 percent
Close on day 4,694.52
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$32.5)
(Reporting by Gina Chang; Editing by Jonathan Hopfner)
((gina.chang@thomsonreuters.com; +886 2 2508-0815; Reuters
Messaging:gina.chang.thomsonreute