Chunghwa Telecom leads tumble

Stocks fell, led by Chunghwa Telecom Co Ltd (中華電信) as the country's biggest phone company plans to offer 5 percent of its shares to local investors next month at less than their initial public offering price.

That prompted some investors who bought Chunghwa shares when the company first went public to sell their holdings as the stock hasn't yet traded above its IPO price of NT$104.

The TWSE Index fell 38.19, or 0.8 percent, to 5,057.07. Within the index, 253 stocks fell and 156 rose. The value of trade was NT$38.7 billion (US$1.1 billion), less than half the daily average over the past six months of NT$80.3 billion.

"No reasonable institutional investor will bid for Chunghwa shares" next month, said Cheng Yi-sheng, who helps manage NT$1.5 billion (US$43 million) in investments at Taiwan Securities Ltd (台証證券).

"New telephone companies will offer cheaper international fees than Chunghwa Telecom and the cellular phone business is getting more competitive." China Steel Corp (中國鋼鐵) tumbled after the Ministry of Economic Affairs, which owns 40.5 percent of the country's largest steelmaker, said it will replace the chairman.

Chunghwa Telecom fell NT$0.5, or 0.8 percent, to NT$61. The country's biggest telephone company will sell 480 million shares probably starting June 7, said Jing Hsu, president of Capital Securities Corp (群益證券), which is managing the sale.

China Steel fell NT$0.8, or 4.1 percent, to NT$18.90. The ministry, which owns 40.5 percent of the country's largest steelmaker, said it will replace Chairman Wang Chung-yu (王鐘渝). A member of the ministry's board representatives traditionally serves as China Steel's chairman.

Macronix International Co (旺宏電子) rose NT$1.40, or 3.9 percent, to NT$36.90. The memory chipmaker said it will slash its capital spending plans this year by half to NT$16 billion to maintain earnings as demand for semiconductors fell.

Siliconware Precision Industries Co (矽品精密) fell NT$0.6, or 2.5 percent, to NT$23.10. Taiwan's second-largest chip assembler said in a statement it expects profit this year to fall 69 percent to NT$986 million from last year.

Taiwan Business Bank (台灣中小企銀) fell NT$0.45, or 4.5 percent, to NT$9.55 after investigators started probing the island's tenth-largest bank by market value for allegedly lending to a client in return for kickbacks. Taiwan Business Bank spokeswoman Chen Hsiao-mei confirmed a report in a local Chinese-language daily that investigators yesterday searched some of the Taipei-based bank's branches and homes of some of its executives for evidence related to an NT$830 million (US$25 million) loan.

Tuntex Distinct Corp (東雲紡織) fell NT0.04, or 6.5 percent, to NT$0.58. The stock has fallen 80 percent since Feb. 22. The textile maker said it received a court order temporarily barring creditors from seizing its assets as it renegotiates terms on NT$29.3 billion (US$860 million) of loans.