Chunghwa leads drop, TSMC rises

Taiwan stocks fell, led by Chung-hwa Telecom Co (中華電信), on concern it will have to pay more to win one of five third-generation mobile-phone licenses. Chunghwa is one of six companies bidding for five 3G licenses.

The TAIEX Index dropped 126.96, or 2.3 percent, to 5,329.19, after falling as much as 2.7 percent. Nine stocks fell for every one that rose. The total value of trade yesterday was NT$144.8 billion (US$4.2 billion), up from NT$140.6 billion on Monday.

Further unsettling the market, an earthquake of magnitude 6.7 at noon caused the index to drop more than 70 points.

Chunghwa Telecom fell NT$1, or 1.8 percent to NT$55. The company submitted a bid before the 5pm deadline, Chunghwa spokeswomen Hsu An-ling (徐安玲) said. Far EasTone Telecommunications Ltd (遠傳電信) rose NT$3.20, or 6.9 percent, to NT$49.40. Taiwan Cellular fell NT$2.80, or 5.6 percent, to NT$47.20.

China Development Industrial Bank (中華開發銀行) rose NT$1.30, or 5.7 percent, to NT$24. Lone Star Fund III LP of the US and China Development Asset Management Co (中華開發資產管理公司) of Taiwan have agreed to set up a up a company that will initially buy NT$10 billion (US$288 million) worth of bad loans from Taiwan's banks.

Lone Star will take a stake of as much as 70 percent and the unit of China Development Industrial Bank, the rest in a company that will buy the bad loans at a discount, said Xie Wei-jin, president of China Development Asset Management.

Taiwan Semiconductor Manu-facturing Co (TSMC, 台積電), rose NT$1.50, or 1.9 percent, to NT$82.50. The chipmaker's shares were boosted by a report by Salomon Smith Barney Taiwan Ltd analyst Andrew Lu (陸行之) who raised his 12-month share price target to NT$160 citing better demand for the company's chips. Lu increased his 2002 earnings per share forecast for TSMC by 50 percent to NT$3.01.