China Steel prepares to sell its shares

Shares of China Steel Corp (中鋼) dropped yesterday on news that the government will start selling 16.2 percent of its shares in the state-run steelmaker next week.

China Steel shares closed down NT$0.4 to NT$24.20 on the TAIEX after reports that the Cabinet's Development Fund (開發基金) may sell a total of 1.5 billion of its shares -- 570 million shares on the domestic market and 969 million overseas.

The sale is expected to generate about NT$35 billion.

According to local newspaper reports, the government will begin trading the first batch of 570 million China Steel shares, or a 6 percent stake, at auctions to be organized from Tuesday to Thursday after the local stock market closes.

No single institutional investor will be allowed to purchase more than 1 percent of the shares, the reports added.

Since designated investors will be located to auction the sales, Vice Minister of Finance Susan Chang (張秀蓮) yesterday urged private investors not to dump their shares in the company ahead of the government's sale.

There was speculation in the local media yesterday that there may be insider-trading connected to the sale since several conglomerates have expressed interest in the steelmaker's shares in order to pave the way for chairman Lin Wen-yuan's (林文淵) to win another term.