Chunghwa scraps plans to hock stocks overseas

Taiwan scrapped plans to sell a US$1.6 billion stake in Chunghwa Telecom Co (中華電信) to overseas investors by year end, after the share price of the island's largest phone company slumped 14 percent from a July peak.

The government planned to sell a 12 percent stake worth NT$54.6 billion (US$1.6 billion) at yesterday's closing price to help pay for a NT$290.1 billion budget shortfall this year.

"We won't be able to go for it this year," said Shen Fufu, a Chunghwa Telecom spokeswoman.

Chunghwa's sale is the latest fundraising to be scrapped as stock and bond markets fall worldwide.

"It's a reflection of risk appetite," said James Squire, who helps manage US$2.5 billion in stocks at Baring Asset Management (Asia) Ltd. "Investors want to see the global backdrop become more benign before they will make their investments."

Chunghwa has proven difficult to sell since the government two years ago said it would sell two-thirds of the phone company.

Its price targets have been more than what investors are willing to pay, leaving 95 percent of the company in its hands after four failed domestic sales this year alone. The government has scrapped two attempts to sell shares to overseas investors.

Hon Hai Precision Industry Co (鴻海精密) earlier this year scrapped a US$1.38 billion securities offer and Chi Mei Optoelectronics Corp (奇美光電) delayed a share sale, two in a series of Taiwanese technology companies to abort or postpone raising capital as investors lowered expectations for a recovery in demand for computers and other electronics products.