Concerns over accounting rules drag stocks down

Shares ended lower yesterday, with financial stocks leading the decline on worries stricter accounting rules will hurt corporate earnings, analysts said.

The TAIEX closed down 87.50 points, or 1.4 percent, to 5,961.24.

Decliners well outnumbered advancers 862 to 79 with 83 stocks unchanged. Turnover rose to NT$61.9 billion (US$1.95 billion) from NT$55.2 billion Monday.

Shares in China Life Insurance Co (中國人壽), the eighth-largest life insurance firm among the 28 operating in Taiwan, fell by the daily maximum limit of 7 percent to NT$16.60.

China Life said yesterday it made an unaudited net loss of NT$3.27 billion, or NT$4.12 a share, last year, after revaluing its assets to comply with stricter accounting rules.

"Financial stocks were seriously hit as investors quickly offloaded their holdings after China Life" posted its earnings, said Stanley Chou, an analyst at Barits International Securities (倍立證券).

Cathay Financial Holding Co (國泰金控), the nation's largest financial group by assets, was off 1.4 percent at NT$58.50, and Mega Financial Holding Co (兆豐金控) dropped 2.9 percent to NT$20.

Worries over the new accounting rule also spurred a sell-off across other sectors.

"It seems overseas institutional investors will extend their recent selling of local shares on concerns over the new accounting rule and first-quarter earnings," Chou said.

Net selling of local shares by foreign institutional investors totaled around NT$55.69 billion between March 14 and yesterday, the stock exchange said.

The technology sector was 1.6 percent lower overall.