TAIEX takes another dip in wake of Chen scandal

The TAIEX opened down 124 points and at one point reached the day’s low of 6,849. The decline had to do with poor performance of Fannie Mae and Freddie Mac shares in overnight trading, and fear that certain financial stocks will suffer more in the wake of a money laundering scandal involving former president Chen Shui-bian. Talks of “scandal-themed” stocks and ways to avoid them spread throughout securities brokerage houses island-wide yesterday.

One such stock was Taishin Financial Holdings Co., Taiwan’s third-worst performing financial service stock this year. It dropped 9 cents, or 0.9 percent, to NT$9.96 after tumbling as much as 5 percent.

The company denied an allegation in a half-page advertisement on the Commercial Times and the Economic Daily News yesterday that its bid for Chang Hwa Commercial Bank in 2005 was illegal.

It also denied an allegation by Shih Ming-Teh, a former Chairman of the opposition Democratic Progressive Party, that it donated NT$2.7 billion to ex-president Chen. Chang Hwa gained 10 cents, or 0.6 percent, to NT$18.4 after falling as much as 1.9 percent.

The government sought to dispel panic in the market during morning trade, with Vice Premier Paul Chiu saying Monday’s 196-point fall was mostly “psychological” and “may soon pass.” The remarks, coupled with rumors that government funds had entered the market, contributed to a rise of the TAIEX, which closed shy of 7,000.

In other stocks, Chunghwa Telecom Co., the island’s biggest phone company, declined 60 cents, 0.8 percent, to NT$78.2, the biggest drop since Aug. 12, after Goldman Sachs Group Inc. cut the stock to “neutral” from “buy.” Far Eastern Textile Co., the island’s biggest maker of textiles, tumbled NT$1.6, or 4.7 percent, to NT$32.65 the lowest since Aug. 17, 2007, after Macquarie Group Ltd. cut its rating to “neutral” from “outperform” and the price estimate to NT$34 from NT$52.

Taiwan Kolin Co., a maker of household appliances, surged 10 cents, or 6.7 percent its daily limit, to NT$1.59, the biggest gain since July 7, after saying it plans to sell a Taipei-based shopping mall.

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