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Taiwan stocks off 8-mth high, flu concerns weigh

Published: 19 May 2009 18:32:45 PST

* Market pulls back from 8-month high

* Airlines, hotels down after first confirmed flu case

* Tech shares down despite China's new subsidy move

* Shin Kong rises as it opens business in China (Updates indexes, adds details and quote)

TAIPEI, May 20 - Taiwan stocks pulled back from an 8-month high early on Wednesday, after the island reported its first confirmed flu case, which sparked selling in airlines and hotel shares.

The main TAIEX index <.TWII> opened higher but turned negative about half an hour into trade after Taiwan reported its first confirmed H1N1 flu case. [ID:nTP283708]

"The flu case had more impact on investors' sentiment, especially after the market has risen a lot recently. The impact won't last long, though, unless the outbreak worsens," said Wang Kao-hsiung, president of KGI Securities.

The transportation sub-index <.TTPI> fell 0.87 percent. China Airlines <2610.TW> fell 2.92 percent and Eva Airways <2618.TW> was down 1.98 percent.

The tourism sub-index <.THOI> declined 0.69 percent, with hotel chain operators Leofoo Development <2705.TW> and Ambassador Hotel <2704.TW> down 3 percent and 1.7 percent, respectively.

Further weighing on the market, investors would remain cautious on the first anniversary of President Ma Ying-jeou taking office.

"Investors are worried that the market would fall as it had previously on the Taiwan president's anniversary in each of the last few years. But this short-term impact will not likely affect the market's momentum," said Wang.

Investors ignored news that China said it would expand an existing subsidy scheme to encourage the purchase of new vehicles and home appliances to boost domestic spending, with Taiwan's electronics and auto parts makers likely to benefit. [ID:nPEK254975]

The electronics sub-index <.TELI> fell 0.45 percent, with TSMC <2330.TW> <TSM.N>, the world's top contract chip maker, down 1.8 percent. The automobile sub-index <.TAUI> edged up 0.22 percent.

The banking and insurance sub-index <.TFNI> was up 0.24 percent, with Shin Kong Financial <2888.TW> 0.33 percent higher.

Shin Kong, parent of Taiwan's No. 3 life insurer, said on Tuesday it expects 30 million Chinese yuan ($4.4 million) of insurance premiums this year as it opens business in China. [ID:nTP239333] (US$1=T$32.9)