Stocks down 1.22% amid FSITC case

Taiwan's benchmark stock index fell more than 1 percent to close below the 7,900-point mark Monday as news of a stock speculation scandal emerged and China moved to cool down its property market, dealers said.

Financials shares, which slumped by 1.5 percent, led the downturn as the Ministry of Financial Affairs (MOFA) sacked Hung Hsin-shih (洪新湜), chairman of the public share investment firm First Securities Investment Trust Co., Ltd (FSITC) yesterday.

Ministry of Finance announced Sunday that it would check the auditing processes of state-invested securities and investment firms following news of possible corruption at such institutions, they said.

Three fund managers with state-invested FSITC were summoned for questioning Friday on suspicion of taking kickbacks from stock speculators.

The weighted Taiex closed down 97.29 points, or 1.22 percent, at 7,867.34, after fluctuating between 7,849.52 and 7,966.22, on turnover of NT$84.02 billion (US$2.83 billion).

The local bourse was further dragged down by China's call on March 1 for higher down payments and interest rates on second-home mortgages in cities where real-estate price gains were excessive, and strict enforcement of a 20-percent tax on profits gained from first-home sales.

The Shanghai Composite Index responded by closing down 3.65 percent at 2,273.40 on Monday.

The downward sentiment also affected Taiwan's old economy stocks. Plastics and chemical shares lost 2.4 percent, while textile shares closed down 1.9 percent.

Cement shares shed 0.7 percent, construction shares fell 1.8 percent, and paper and pulp stocks closed down 1.4 percent.

Shares in the broader machinery and electronics sector also lost 1 percent as the first quarter is a traditionally slow season in the high-tech sector.

Shares of IC chip designer MediaTek closed up 0.89 percent at NT$341.50, while Taiwan Semiconductor Manufacturing Co., the world's largest contract chip manufacturer, closed down 2.86 percent at NT$102.

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