Taiwan stocks fall the most in two months

All 28 industry groups on the TAIEX index fell, driving the gauge down 3.5 percent to 6,225.56 at the close, the biggest decline in eight weeks. The index, the world's worst performer this month, has given up about half the 24 percent gains made since April 29, when Taiwan said it will let mainland Chinese institutional investors apply to invest directly in shares and futures listed on the island's bourses.

“There are enormous profits to take,” said Howard Wang, head of the Greater China team at JPMorgan Chase's JF Asset Management unit in Hong Kong. Stocks have pared gains as analysts have “slowed down or ended” upwards revisions to earnings forecasts, Wang said.

Together, the island's three major institutional investors made a total net sale of NT$5.616 billion, breaking down into net sale of NT$2.635 billion by foreign investors, NT$1.601 billion by investment trust firms, and NT$1.38 billion by securities firms.

Last week, foreign investors made a total net sale of NT$14.811 billion, according to data from the Taiwan Stock Exchange.

The fact a total of 724 publicly traded companies will hold their annual shareholders' meetings this week — 334 today and another 390 on Friday — might also have something to do with yesterday's decline, as investors exercised caution prior to these important events, observers said.

Last week, 281 firms held their shareholders' meetings, and the TAIEX fell for over 400 points over a two-day period.

Credit Suisse Group AG advised investors in a June 8 report to switch from Taiwan to Southeast Asia stocks as the region's discount to the island is among the largest on record. The island's equities are no longer “compelling,” Jonathan Neill, director at FPP Asset Management LLP, manager of the second-best performing Taiwan fund this year, said by e-mail June 10, adding that the fund has reduced its investments in Taiwan.

Taiwan Semiconductor Manufacturing Co., the world's largest custom-chip maker, declined 4.8 percent while Cathay Financial Holding Co., the island's biggest listed financial services company, dropped 2.9 percent. China Steel Corp. lost 2.3 percent. Taiwan won't allow China's sovereign wealth fund to invest directly in the island's stocks, the Economic Daily News reported June 12, citing Taiwan's financial regulator.

In other stocks, SinoPac Financial Holdings Co. rose 4.9 percent to NT$9.8, the most since June 1. China Minsheng Banking Corp. and Shanghai Pudong Development Bank are interested in buying shares in the Taiwanese company, the Taipei-based Economic Daily News reported, without saying where it got the information. SinoPac may sell as much as 20 percent of itself to Chinese investors, the Chinese-language newspaper said.

Uni-President Enterprises Corp., Taiwan's largest food-processing company, dropped 3.9 percent to NT$32.95, the lowest since April 29. Taiwan Sugar Corp., a state-run agricultural company, last week raised its price for cooking oil by 19 percent to reflect higher costs for soybeans.

Walsin Lihwa Corp., Taiwan's largest maker of electric wires and cables, fell the daily 6.9 percent limit to NT$9.64, the lowest since May 15. The company plans to invest US$200 million to build a factory producing light-emitting diode lighting products in Xian, China, the Economic Daily News reported on June 13, citing Chairman Chiao You-lun.

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