LCD panel maker HannStar Display Corp’s (瀚宇彩晶) shares plummeted near their daily limit yesterday after the stock market regulator tightened the rules on margin trading of the stock to prevent it from overshooting.
Investors who maintain a long position on HannStar can now only borrow 40 percent of the stock’s value from brokerages, down from 60 percent previously, the Taiwan Stock Exchange said in a statement on Thursday.
For short-sellers, they will have to pay a deposit 20 percent higher than the norm for shares borrowed from brokerages, it said.
In addition, transactions of HannStar shares can only be conducted via traders’ bidding every 20 minutes for 10 sessions through June 6, instead of the usual automated trading, the statement said.
HannStar shares plunged 6.74 percent to NT$13.15 yesterday, ending a 10-day winning streak. The TAIEX dropped 0.34 percent yesterday.
The company’s shares have surged three-fold since the beginning of this year, buoyed by strong net profits of NT$929 million (US$30.93 million) last month and its second-straight quarterly earnings of NT$1.32 billion last quarter after ending two years of losses in the final quarter of last year.
With the company’s net value rising to NT$10.13 per share, above the book value of NT$10 per share, margin trading on the stock was restored on Thursday. However, feverish trading of the stock, with 280 million shares changing hands, forced the regulator to tighten rules on margin trading later that day.
That put a damper on trading of HannStar shares, whose turnover dropped to 52.71 million shares yesterday.
HannStar’s bigger local rival Innolux Corp (群創光電) also swung back into the black last quarter with a net profit of NT$1.68 billion. Another rival, AU Optronics Corp (友達光電), remained in the red.