Sharp Corp shares yesterday jumped the most in 22 months in Tokyo trading after the electronics maker controlled by Foxconn Technology Group (富士康科技集團), known as Hon Hai Precision Industry Co (鴻海精密) in Taiwan, canceled plans to raise as much as ￥200 billion (US$1.8 billion) in a public share sale.
The Japanese company, which had planned to use the proceeds to purchase preferred stock and improve its finances, cited market instability fueled by US-China trade tensions.
Sharp also retracted a full-year report related to the sale, it said in a statement.
The shares rose 15 percent to ￥2,700 at the close, the biggest advance since August 2016.
“The threat of dilution was one of the main reasons for the recent share price declines,” Ace Research Institute analyst Hideki Yasuda said. “With that out of the way, it’s easier for investors to buy back in.”
Foxconn took control of the company in 2016 and injected money for capital investments.
The shares rose to a peak of about ￥5,000 last year before sliding over concerns of weaker demand for smartphones and displays that Sharp makes for companies, including Apple Inc.
“Due to US-China trade friction, the stock market has become more volatile, so to continue with the new share issue would not be beneficial to our shareholders and stakeholders,” Sharp said in the statement.
Sharp had planned to spend ￥185 billion to buy back 200,000 preferred shares and retire the share class.
The remainder of the proceeds were to be used on capital expenditure, as well as research and development.
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