Formosa Plastics leads declines

Stocks declined for the second day in three. Formosa Plastics Corp (台塑) and China Manmade Fibers Corp (中國人纖) fell after Chinese Petroleum Corp (中油) halted production at a refinery last night.

The stoppage "will cause a short-term supply disruption for many of Taiwan's petrochemical makers and hurt their profits," 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).

The TAIEX shed 24.65, or 0.5 percent, to close at 4,515.07. Losers led winners 526 to 125, with 84 stocks unchanged. Shares worth NT$55.4 billion changed hands, about a quarter less than the daily average in the past three months.

MSCI Taiwan futures for February delivery in Singapore declined 0.7 percent to 194.40. The Taiwan Futures Index lost 0.4 percent to 4520.

Formosa Plastics fell NT$1, or 2.2 percent, to NT$44.80. China Manmade dropped NT$0.75, or 5.2 percent, to NT$13.80.

Chinese Petroleum asked Formosa, China Manmade and other petrochemical makers to reduce their production by about a half because it is unable to supply them with enough raw material, a local newspaper reported, citing company officials it didn't identify.

Chinese Petroleum expects to restart the plant today, though it has asked its customers to "make some adjustment in their operations," said company spokesman Chen Lie-way.

"It's not a very big damage and we should be able to restart tomorrow," Chen said yesterday.

The chemical plant that was shut can process about 400,000 tonnes a year of naphtha, an oil product, into ethylene, a chemical raw material for making plastics.

Polaris Securities Co (寶來證券), the nation's largest on-line stock broker, fell NT$0.1, or 0.7 percent, to NT$14.80. The company merged its futures-trading unit with the Taiwan unit of Refco Group Ltd, the world's largest privately held futures broker, to form the country's biggest broker.

The new combined company will handle about 16 percent of market trading, Refco and Polaris said in a joint statement.

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and United Microelectronics Corp (UMC, 聯電) extended gains on the back of a strong showing in their American depository receipts, leading the electronics sector higher. However, their gains failed to convince investors to inject funds into the broader market amid the countdown to war in Iraq.

TSMC closed up NT$0.80 at NT$47.80 and UMC was up NT$0.40 at NT$21.60.

Taiwan Cellular Corp (台灣大哥大) fell NT$0.5, or about 2 percent, to NT$24.30. Taiwan Ratings Corp (中華信評) said it lowered its long-term issuer credit rating on Taiwan Cellular, the nation's largest cell phone service provider, to reflect changes in the company's financial policy.