Taiwan's stocks declined, led by Cathay Financial Holding Co (國泰金控), on a newspaper report the government plans to ask insurance companies to put more profits aside as reserves to better protect clients' interests.
The TAIEX fell 92.45, or 1.5 percent, to 5952.32 at the 1:30pm close in Taipei. The Taiwan Futures Index dropped 1.3 percent to 5978. About seven stocks fell for every three that rose.
Insurers may need to increase their reserves to 30 percent of net profits from 10 percent at present, or they may need to keep 10 percent of their profit as reserves and put in an additional 20 percent as reserves from special earnings, the Commercial Times reported, citing the Ministry of Finance.
The plan may lead to a change of the current insurance company laws and is expected to proceed gradually, the newspaper said.
"The government is installing curbs to make sure growth in the stock market and economy is not just a bubble," said Yu Reming, who manages the US$148 million Balanced Fund at Prudential Securities Investment Trust Co (保誠投信). "The new rules would help insurers in the long run." Cathay Financial Holding, Taiwan's largest life insurer, fell NT$1.50, or 2.9 percent, to NT$50. Fubon Financial Holding Co (富邦金控), the island's largest non-life insurer, shed US$0.40, or 1.2 percent, to NT$32.50.
About 3.5 billion shares changed hands, 19 percent below the average daily trading in the past three months. Shares worth NT$76.7 billion (US$2.3 billion) traded, 20 percent below the three- month daily average.
The following stocks also rose or fell in Taipei trading.
Chang Hwa Commercial Bank (彰化銀行), the sixth-biggest lender by assets, shed 30 cents, or 1.9 percent, to NT$15.80. Chang Hwa plans to offer 1.4 billion new shares in a private placement to an overseas investor next year, the Commercial Times reported on Saturday, citing company Chairman Chang Po-shin (張伯欣).
Chang declined to comment if the stake will be offered to ING Groep NV, the Netherlands' largest financial services company. If the Dutch bank bought the shares it would get control of Chang Hwa, the report said. Chang Hwa last year hired ING to help it reorganize its business.
Mosel Vitelic Inc. (茂矽), a computer memory-chip maker in Taiwan, gained 13 cents, or 6 percent, to NT$2.31. Mosel plans to repay overdue bonds by selling 80 million shares in ProMOS Technologies Inc (茂德科技). The stake is worth NT$1.12 billion at ProMOS' closing share price of NT$14.05 on Friday.
Mosel, which posted a NT$4.96 billion loss in the first nine months, need to repay bonds which fell due in February and to help pay for computer-memory chips it bought from ProMOS. ProMOS shed US$0.35, or 2.5 percent, to NT$13.70.
Nanya Technology Corp. (南亞科技), Taiwan's biggest maker of computer memory chips, shed US$0.40, or 1.9 percent, to NT$21.20 after saying it is planning to sell as much as US$220 million of bonds overseas which can be converted into its shares.