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TSMC dividend story dampens local shares

Stocks fell, led by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), after a local newspaper said the company may issue cash dividends. Some investors said that would cut into its spending on research and design.

Chunghwa Telecom Co (中華電信) dropped after the government sold only 1 percent of the 100 million shares on offer in the first of a three-day auction of the phone company. Chunghwa Telecom lost NT$0.50, or 1 percent, to NT$52.

The TAIEX shed 27, to close at 4,499.69.

MSCI Taiwan futures for February delivery in Singapore fell 1.5 percent to 188.50. The Taiwan Futures Index lost 1 percent to 4,469. About three stocks fell for every two that gained. Shares worth NT$44 billion changed hands in the market.

TSMC, the world's largest supplier of made-to-order chips, dropped NT$0.60, or 1.4 percent, to NT$43.40.

The company said it proposed to offer a 2002 dividend of 80 shares for every 1,000 held after held a board meeting yesterday morning.

The company will propose a combined cash dividend of NT$455 million for preferred A shareholders. Shareholders will decide on the proposals at an annual meeting on June 3, the company said.

"The bigger question is can a steady cash dividend be provided every year," said Mike Shiao (蕭光ㄧ), who manages the NT$1.1 billion (US$32 million) Taiwan Select Growth Fund at Invesco Taiwan Ltd (景順投信).

Shiao has invested his fund in companies that paid dividends of at least NT$1 per share in the past three years.

Hon Hai Precision Industry Co (鴻海精密), a maker of computer-cable connectors, rose NT$0.50, or 0.5 percent, to NT$112.50. Hon Hai received an order to make several million cell-phone handsets for UTStarcom Inc, a local newspaper reported.
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