Shares fall, led by First Financial

Stocks declined yesterday as state-controlled banks such as First Financial Holding Co (第一金控) and Mega Financial Holdings Co (兆豐金控) fell amid concern over the role of their state-appointed chairmen.

The TAIEX fell 14.46, or 0.3 percent, to 4,451.11. Six stocks fell for every five that rose. The Taiwan Futures Index fell 0.2 percent to 4,434.

The Ministry of Finance wants to make the chairmen of the two banks responsible to private shareholders rather than the government before elections later this year. Still, the ministry is planning to support the incumbents, Jerome Chen (陳建隆) at First Financial and Cheng Shen-chih (鄭深池) at Mega Financial, in the elections for chairmen, a local newspaper reported.

"This is a politically motivated decision to support people that are close to the ruling party to run state-controlled banks," said Reming Yu, chief investment officer at Prudential Securities Investment Trust Co (保誠投信).

"They will only deviate state banks from the government's privatization plans," Yu said.

Computer-memory-chip makers such as Nanya Technology Corp (南亞科技) and Winbond Electronics Corp (華邦電子) rose on a report they are raising inventories to help lift prices.

First Financial, the owner of the nation's fourth-largest bank by assets, fell NT$0.20, or 1 percent, to NT$20.60. Mega Financial, which owns Chiao Tung Bank (交通銀行), fell NT$0.10, or 0.6 percent, to NT$16.10.

Nanya Technology, the country's largest maker of computer-memory chips, rose NT$0.70, or 3.3 percent, to NT$21.80. Rival Winbond rose NT$0.30, or 2 percent, to NT$15.40.

C-Com Corp (正華通訊), a maker of telecommunication network systems, rose NT$0.40, or 6.8 percent, to NT$6.25.

United Microelectronics Corp (UMC, 聯電), the world's second-largest maker of computer chips on a subcontracting basis, on Monday bought about 18 percent of C-Com after swapping shares of one of its units with C-Com, a local newspaper reported. UMC fell NT$0.10, or 0.5 percent, to NT$20.40.

Formosa Plastics Group (台塑) fell NT$0.60, or 1.2 percent, to NT$47.80. Formosa said it may sell bonds overseas and draw bank loans to raise part of the NT$124.6 billion it plans to spend on expanding its sixth naphtha-cracker complex.

Formosa will also sell shares in its oil-refining unit to the public to fund the fourth stage of the complex.

The expansion of the complex will ensure a low-cost supply stream for Formosa units in China as they compete to grab market share there, some analysts said.