Fluctuations in Taiwan-based smartphone camera lens supplier Largan Precision Co’s (大立光) share price triggered a price stabilizing mechanism on the local main board yesterday, leading to 22 brief trading suspensions of the shares in the morning session, the Taiwan Stock Exchange (TWSE) said.
The TWSE said that trading of Largan shares was suspended for two to three minutes 22 times before 10am, after the exchange’s price stabilizing mechanism found some irregularities in trading orders.
Under the price stabilizing mechanism, as long as a price-matching simulation system finds that a share could rise or fall more than 3.5 percent after matching potential buyers and sellers on a trial basis, trading of those shares will be suspended for two to three minutes during the TWSE’s call auction, where buy and sell orders are collected over a fixed period and are matched at the end of the period.
The TWSE said that it has launched an investigation into trading irregularities and that such brief trading suspensions are designed to avoid market speculation by certain traders, which could hurt other investors and even affect the broader market.
Market analysts said it is likely that some institutional investors wanted to push up Largan shares in a bid to lure other institutional investors to follow suit to chase prices, but those who boosted Largan shares would take advantage of the soaring share price to cut their holdings and lock in profits.
Before triggering the price stabilizing mechanism, the shares continued momentum from previous trading sessions amid optimism about the smartphone camera lens marker’s bottom line.
However, after the suspension, Largan shares fell into negative territory and the weakness continued into the end of the day’s session, which dragged down the broader market, as Largan stock is the most expensive on the Taiwanese market.
Largan shares closed down 3.26 percent at NT$4,010 yesterday on the main board, off an early high of NT$4,245, with 784,000 shares changing hands.
Led by Largan’s downturn, the bellwether electronics sector ended down 0.35 percent and the weighted index on the main board closed down 0.32 percent.
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