The stock exchange regulator’s plan to lift the local bourse’s daily trading price fluctuation limit from 7 percent to 10 percent would be in line with international practice, allowing public companies to be traded at prices that better reflect their growth fundamentals, pundits said yesterday.
However, the move is also sure to trigger selling pressure in the short term before the nation’s equity investors become accustomed to a greater fluctuation range, they said.
“Any such liberalization measures will help beef up the local bourse’s international competitiveness since major markets in the world impose no daily trading limit,” said Polaris Securities Co (寶來證券) vice chairman Huang Chi-yuan (黃齊元) by telephone, who has long advocated turning the TAIEX into the “NASDAQ of Asia.”
Calling the Taiwan Stock Exchange Corp’s (TWSE, 台灣證交所) move “too little, too slow,” Huang said the local bourse has long been a laggard behind its peers in Asia.
An extended trading range will force equity investors to pay more heed to a company’s growth fundamentals when buying or selling shares, said Huang, who is also chairman of Taiwan M&A and PE Council (台灣併購與私募協會).
Currently, Taiwan’s daily trading limit of 7 percent trails Shanghai’s 10 percent and South Korea’s 15 percent, while stock markets in the US, the UK, Germany and Hong Kong put no daily limit on price fluctuations.
TWSE chairman Schive Chi (薛琦) said on Thursday that the regulator is in favor of raising the range of the daily fluctuation band for stocks, beneficiary certificates, Taiwan depositary receipts and convertible bonds after surveys confirmed support from both domestic securities firms and institutional investors.
However, the proposal is subject to a final approval from the Financial Supervisory Commission (FSC), which vetoed the proposal once before.
Expressing concerns, FSC Vice Chairman Wu Tang-chieh (吳當傑) said late on Thursday that careful deliberations would be required when reviewing the proposal since retail investors make up as much as 70 percent of the local bourse’s trading activities, local media reported. He said that markets that draw mostly retail investors would be vulnerable to a bigger trading limit range, the report said.
Retail investors make up 22 percent of the Japanese market, 37 percent in Hong Kong, 15 percent in Germany, 14 percent in the UK and 15 percent in France, the FSC said.
Meanwhile, Kuo Min-hua (郭敏華), associate professor of finance at Shih Hsin University, was neutral about the proposal, saying there are pros and cons to the idea.
“Any liberalization move will come with a price,” she said yesterday. “In the case of an extended trading range; investors will have to endure a greater price fluctuation upward or downward.”
It is also too premature to say whether the market’s upward momentum would be boosted if the trading cap were lifted, she said.
David Chu (儲祥生), chairman of Hua Nan Securities Co (華南永昌投顧), warned that investors would likely go through a painful transitional period in a month or two to get used to a 10 percent daily trading range.
“The rising cost for investors to close shares trading at a 10 percent limit-up will force cautious investors to dump shares for quick profits, which may drive up selling pressures in the short run,” he told the Chinese-language United Evening News on Thursday.
Quanta Computer Inc (廣達) chairman Barry Lam (林百里) is expected to share his views about the artificial intelligence (AI) industry’s prospects during his speech at the company’s 37th anniversary ceremony, as AI servers have become a new growth engine for the equipment manufacturing service provider. Lam’s speech is much anticipated, as Quanta has risen as one of the world’s major AI server suppliers. The company reported a 30 percent year-on-year growth in consolidated revenue to NT$1.41 trillion (US$43.35 billion) last year, thanks to fast-growing demand for servers, especially those with AI capabilities. The company told investors in November last year that
Intel Corp has named Tasha Chuang (莊蓓瑜) to lead Intel Taiwan in a bid to reinforce relations between the company and its Taiwanese partners. The appointment of Chuang as general manager for Intel Taiwan takes effect on Thursday, the firm said in a statement yesterday. Chuang is to lead her team in Taiwan to pursue product development and sales growth in an effort to reinforce the company’s ties with its partners and clients, Intel said. Chuang was previously in charge of managing Intel’s ties with leading Taiwanese PC brand Asustek Computer Inc (華碩), which included helping Asustek strengthen its global businesses, the company
Taiwanese suppliers to Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) are expected to follow the contract chipmaker’s step to invest in the US, but their relocation may be seven to eight years away, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. When asked by opposition Chinese Nationalist Party (KMT) Legislator Niu Hsu-ting (牛煦庭) in the legislature about growing concerns that TSMC’s huge investments in the US will prompt its suppliers to follow suit, Kuo said based on the chipmaker’s current limited production volume, it is unlikely to lead its supply chain to go there for now. “Unless TSMC completes its planned six
TikTok abounds with viral videos accusing prestigious brands of secretly manufacturing luxury goods in China so they can be sold at cut prices. However, while these “revelations” are spurious, behind them lurks a well-oiled machine for selling counterfeit goods that is making the most of the confusion surrounding trade tariffs. Chinese content creators who portray themselves as workers or subcontractors in the luxury goods business claim that Beijing has lifted confidentiality clauses on local subcontractors as a way to respond to the huge hike in customs duties imposed on China by US President Donald Trump. They say this Chinese decision, of which Agence
RSS