Taiwan depositary receipts (TDRs) issued by Tycoons Worldwide Group (Thailand) Public Co Ltd (TYCN, 泰聚亨) took a dive yesterday, the first day of trading, amid weak global demand, dealers said.
TYCN fell 7 percent, the maximum daily decline, from the issue price of NT$14.70 (US$0.48) to NT$13.70, with 4.01 million shares changing hands. The benchmark TAIEX ended up 0.50 percent at 7,182.61 points.
TYCN is an overseas subsidiary of the Taiwan-based steel maker Tycoons Group Enterprise Co Ltd (聚亨企業).
“The sell-off defied the conventional wisdom that a newly listed company would have a honeymoon period with investors,” Grand Cathay Securities (大華證券) analyst Mars Hsu (徐振家) said.
“The stock has been affected by slowing global demand, because the world economy is haunted by the debt crisis in Europe and fears of a double-dip recession in the United States,” Hsu said.
Even worse, he said, investors expect no immediate rebound in demand from emerging economies, including China.
According to TYCN, which rolls out wire rod, annealed wire, screws and bolts at its plant in Rayong Province in eastern Thailand, its major customers are from Asia, West Europe and North America.
To deal with the fragile economic fundamentals in Europe and the US, TYCN said it was working to penetrate the markets in Asia.
Because the company is located in a member country of ASEAN, it has preferential tariff status in the trading bloc, it said.
With the steel business about to enter the peak season of the year in the fourth quarter, the company said it expected demand to pick up.
For the TDR trading, TYCN issued 30 million TDRs, each representing two common shares in the company, which has been listed on the Stock Exchange of Thailand since December 2003.
In the first half of this year, TYCN posted NT$262 million in net profit, which accounted for 69 percent of its net income for last year. Its earnings per share stood at NT$0.43.