The government yesterday sold 5.903 million shares of state-run China Steel Corp (
The government, which is the biggest shareholder in the company, aims to sell 570 million shares of the steelmaker to cover budget deficits. It wants to reduce its holdings in the company from 39.92 percent to 34 percent.
"We're not concerned about the sales even though we only sold 1 percent of the proposed quota for the first day," said Liu Po-hung (劉柏宏), a section chief at the Cabinet's Development Fund, which organized the auction.
Market watchers generally said the lukewarm response yesterday was normal.
"The demand for steel has substantially increased in both Taiwan and China, which led to a better-than-expected performance for China Steel in the first half of the year,"said Shaw Wang (
China Steel reported NT$11.4 billion in sales last month, up from NT$8.9 billion in the same period a year earlier. The sales for the first seven months of the year reached NT$73.9 billion, or 65.2 percent of the goal set by the government.
"The limited sales on the first day were as expected, because many prospective investors are on the sidelines waiting to see how the market reacts to the auction," Wang said.
Another analyst said the sale price seems unusual, as China Steel closed down NT$0.50 to NT$24 on the TAIEX yesterday, slightly lower than the auction price.
"The share price offered in an auction should be lower than market price to solicit inves-tors," said said Matthew Wang (
The company's stock started to fall after the government announced last week that it would be selling some of its shares.
"Investors were expecting a lower bidding price [yesterday]," Wang said.
Investors yesterday submitted bids for a total of 1.80 billion shares, while the government has set NT$24 as a minimum price for the tender. The unsold 564.097 million shares are up for auction today and tomorrow.
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