The Financial Supervisory Commission yesterday encouraged listed companies to buy back shares and hold conferences to boost investors’ confidence and buoy the local bourse.
“Listed companies’ implementing share buyback plans will help boost share prices and prevent prices from falling irrationally,” the commission said in a statement.
Since June 1, the TAIEX has fallen 16.64 percent on worries about debt problems in both the US and the eurozone, as well as concerns about Formosa Plastics Group’s (台塑集團) profitability in the months ahead after several plants of its affiliated companies in Mailiao (麥寮), Yunlin County, were ordered to shut down after a spate of fire accidents.
So far this week, the benchmark index has dropped 4.58 percent after Standard & Poor’s lowered the US government’s credit rating to “AA+” from “AAA” on Friday, the Taiwan Stock Exchange’s data showed.
As the local bourse is currently in correction territory with share prices being significantly depressed, listed companies have been urged to buy back their shares on the open market to provide a buffer against the falling prices.
Normally, share buybacks can lower the number of a company’s outstanding shares and help increase earnings per share to shareholders, which in turn will help boost market sentiment and share prices.
Based on the commission’s data, several listed companies — including HTC Corp (宏達電), MediaTek Inc (聯發科) and Siliconware Precision Industries Co (矽品) — have announced 44 share buyback plans between June 1 and yesterday, with 38 of those plans still ongoing.
Financial Supervisory Commission Vice Chairman Wu Tang-chieh (吳當傑) said yesterday the ongoing buybacks were worth the equivalent of about NT$38.76 billion, which would boost the market.
Shares of Siliconware rose 2.46 percent to NT$25 yesterday after the chip-packaging and testing company announced on Monday it would repurchase 50 million of its shares — its first buyback in nearly 10 years — between yesterday and Oct. 8 at prices ranging from NT$18 to NT$30 per share.
Additional reporting by Crystal Hsu