Stocks fall, led by Cathay, Evergreen

Taiwan's stocks fell yesterday, driving the benchmark index to its biggest two-day slump in almost four years. Cathay Financial Holding Co. pacing declines among banks after the island's jobless rate unexpectedly rose to a seven-month high in December, raising concern that domestic consumption may falter.
Evergreen Marine Corp. paced declines in export-related firms on concern the U.S. Federal Reserve's 0.75 percentage- point rate reduction, its first emergency cut since 2001, is evidence the world's biggest economy is worsening.

"The Fed knows more than anyone about the U.S. economy, so the heavy dosage is an indication of the situation," said Eric Chou, who helps manage US$1.8 billion at Jih Sun Securities Investment Trust Co. in Taipei. "The Fed's actions also will not avert slowing demand at home."

The TAIEX index dropped 173.56, or 2.3 percent, to close at 7,408.4 in Taipei. The measure's 8.7 percent slump in two days is the biggest since March 23, 2004. One in nine stocks climbed yesterday. Futures due in February slid 2.8 percent.

Taiwan Semiconductor Manufacturing Co. led chipmakers higher after Texas Instruments Inc. said a U.S. economic slump won't affect demand for chips.

Cathay, the island's biggest financial services provider by market value, declined NT$5.3, or 7 percent, to NT$71. Shin Kong Financial Holding Co., which operates banks and owns the third largest insurer, dropped NT$1.65, or 7 percent, to NT$22. Yuanta Financial Holding Co., which owns the largest Taiwanese stock brokerage firm, fell NT$1.75, or 7 percent, to NT$23.4.

Taiwan's jobless rate unexpectedly rose to 3.95 percent, a seven-month high, in December. The median estimate of eight economists surveyed by Bloomberg News was 3.91 percent.

Evergreen, Taiwan's biggest container-shipping line, fell NT$1.8, or 7 percent, to NT$24. Yang Ming Marine Transport, the second largest, slipped 25 cents, or 1.2 percent, to NT$21.

The Fed cut its benchmark rate to 3.5 percent Tuesday, citing a "weakening" economic outlook and "increasing downside risks to growth." It was the biggest single reduction since the central bank began using the rate as the principal tool of monetary policy around 1990. Policy makers weren't scheduled to meet to discuss rates until Jan. 29-30.

Taiwan Semiconductor, the world's largest custom-chip maker for clients such as Texas Instruments, rose NT$1.4, or 2.8 percent, to NT$51. Nanya Technology Corp., the island's second-largest memory-chip maker, added NT$0.3, or 1.7 percent, to NT$17.7.

Texas Instruments, the biggest maker of mobile-phone chips, sees no signs that a U.S. economic slump will affect demand for chips, Chief Financial Officer Kevin March said. Analysts had expressed concern that slowing sales of appliances, personal computers and electronics may limit the need for Texas Instruments' chips.

Political uncertainty added to investor concerns as the Cabinet announced it would resign tomorrow following defeat of the ruling Democratic People's Party in elections last week.

Taiwan's premier Chang Chun-hsiung hastened his cabinet's resignation -- due next week -- over disagreements on taxation and national health-care policies with DPP Chairman Frank Hsieh, the People's Daily reported without citing anyone.

The following stocks also rose or fell.

Catcher Technology Co., Taiwan's largest maker of metal casings for computers and mobile phones, declined NT$7.4, or 6.9 percent, to NT$99.6. Alex Yang, an analyst at Lehman Brothers Holdings Inc., cut his share-price forecast for the stock by 46 percent to NT$147 a share from NT$270.

Innolux Display Corp., the world's second-largest maker of flat-screen computer monitors, dropped NT$5.5, or 7 percent, to NT$73.60. Naiwen Kerr, an analyst at Lehman, lowered the brokerage's share-price forecast for the stock to NT$126 from NT$175, citing slowing growth momentum, according to a report dated Tuesday.