Formosa Plastics falls on concern storm may cut sales

Shares of Formosa Plastics Corp (台塑), the nation's largest maker of polyvinyl chloride, or PVC, fell to their lowest in more than four months on concerns snowstorms in China might disrupt sales.

The shares fell 3.7 percent to close at NT$81.90, the lowest since Sept. 17. The benchmark TAIEX advanced 1.2 percent. The Taipei-based company, which gets one quarter of its sales from China, has dropped 10 percent this year.

The worst snowstorms in a decade in China have killed 24 people since Jan. 10, the official Xinhua news agency reported. Snow has been falling in eastern, central and southern China for more than two weeks, halting rail and air service before the weeklong Lunar New Year holidays.

"Some investors are selling the stock upon hearing negative news," said Ernest Chiang (蔣尚勳), who owns Formosa Plastics shares among the equivalent of US$62 million he manages for IBT Asset Management Co (台灣工銀投信) in Taipei.

"The snowstorms and blackouts happen when it's the peak season for shipments before the Lunar New Year," he said.

Jerry Lin (林勝冠), a Formosa Plastics spokesman, said by telephone yesterday that deliveries to customers to China remained normal.

China has shut 5 percent of coal-fired plants because of delays in coal deliveries. The nation is battling its worst power shortage ever, the State Electricity Commission said last week. The China Meteorological Association forecast more blizzards, ice and freezing temperatures today.

"The storms may reduce working days," said Erik Chang, a Taipei-based analyst at Capital Securities Corp (群益證券), who has a "sell" rating on the stock.

Retail investors, who account for more than half of trading in the local bourse, may have been selling Formosa Plastics shares, Chang said.