Yuanta Financial Holding Co’s (元大金控) plan to buy back its own shares will not ease its downward share price fluctuations, attributed to the recent exodus of foreign capital from the local stock market, an analyst said yesterday.
“Domestic financial shares, including those of Yuanta Financial, are expected to continue their downward trends until foreign investors complete their de-leveraging goal in Asian markets,” Allen Tseng (曾炎裕), an associate manager of Capital Securities Corp (群益證券), said by telephone yesterday.
Shares of Yuanta Financial closed down NT$0.8 at NT$11.25 yesterday. The stock ended nine days of losses on Tuesday with a short-lived uptick when Yuanta Financial’s board finalized a proposal to buy back 35 million shares at between NT$11 and NT$20 per share.
The financial service provider plans to complete the buyback by Nov. 28, its press release said on Tuesday.
Shares to be bought back will amount to a 0.42 percent stake in Yuanta Financial, the statement added.
The shares will be used as bonuses to reward outstanding employees over the next three years, company vice president and spokesperson Chuang Yu-teh (莊有德) said yesterday.
The buyback plan comes at a time when the company’s share prices have declined to new lows, he added.
Capital Securities’ Tsang yesterday said that the company’s stock was likely to stay in the doldrums for some time, given the current global financial turmoil and the economic downturn.
Yuanta Financial shares suffered a record 31 percent decline in the nine trading days to Tuesday following a raid by prosecutors on company offices on Oct. 17.
On Oct. 19, company executives — including general manager Victor Ma (馬維建) and chief executive officer Michael Ma (馬維辰) — were subpoenaed by prosecutors working on a corruption investigation into former president Chen Shui-bian (陳水扁) and his wife Wu Shu-jen (吳淑珍).
Yuanta Financial said that the subpoena had nothing to do with company management, instead pointing to the Ma brothers’ personal conduct, including the alleged transfer of US$180,000 to Wu as a wedding gift to her son.
The “investigation into allegations of bribery and money laundering of former President Chen Shui-bian continues to weigh heavily on Far Eastern group members and select banking stocks,” SinoPac Securities Corp (永豐金證券) said in a client note yesterday.
Far Eastern Department Store Co (遠東百貨) and Chinatrust Financial Holding Co (中信金控), for example, saw their share prices fall limit-down to NT$13.05 and NT$8.26 respectively yesterday.
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