Matthew in a Thai for 11th place
Matthew, the 2009 Women's British Open Champion from North Berwick, was on three under par and in a tie for 11th place, six shots behind Tseng. She was the top European alongside Norway's world No.3, Suzann Pettersen (73).
Matthew, the world No.37, has not played in a tournament for four months, but her main goal this year is to make her sixth Solheim Cup appearance for Europe at Killeen Castle in Ireland in September.
Tseng, the reigning Women's British Open Champion, won two tournaments in Australia this month - the Women's Open and the ANZ Masters - and she fired a 70 to edge into the lead on nine under par.
She was one ahead of 21-year-old Michelle Wie, who carded a 71, and South Korea's In Kyung Kim (72).
England's Karen Stupples, the only other British player in the field, shot a disappointing 77 and was tied for 35th place on four over par.