Shares of Hon Hai Precision Industry Co (鴻海), a key assembler of Apple Inc’s iPhones, yesterday remained strong following media reports that chairman Terry Gou (郭台銘) bought about NT$2 billion (US$64.8 million) shares last month, dealers said.
However, the gains could be short-lived as global demand for the latest iPhones is slower than expected and trade tensions between the US and China continues, they said.
The stock closed 4.1 percent higher at NT$71.20 on turnover of 52.2 million shares, Taiwan Stock Exchange (TWSE) data showed.
The stock attracted strong buying soon after the market opened and its momentum continued, dealers said.
“It seems that market confidence in Hon Hai shares was reinforced by Gou’s move to spend a lot of money to increase his stake in the company,” Ta Ching Securities (大慶證券) analyst Jerry Chen said.
Hon Hai’s market capitalization rose from NT$948 billion on Tuesday to NT$984 billion yesterday.
In a posting to the TWSE on Tuesday, Hon Hai said Gou bought a total of 27 million company shares last month, raising his holding to 1.32 billion.
After the purchase, Gou’s stake in Hon Hai rose from 9.36 percent in October to 9.55 percent at the end of last month.
Based on Hon Hai’s average closing price of NT$71.75 last month, Gou is estimated to have spent about NT$2 billion to raise his stake in the company.
Commenting on Gou’s share purchases, Hon Hai said it was an issue of personal wealth management.
On Tuesday, Hon Hai shares rose 1.03 percent to NT$68.40 after the company reported better-than-expected sales for last month.
Consolidated sales rose 1.99 percent from a month earlier to NT$601.44 billion last month, the highest level ever for the month and the second-highest month for the company.
On an annual basis, sales rose 5.59 percent.
“After the gains on Tuesday and Wednesday, Hon Hai shares have turned technically healthier, but I am afraid that such a strong showing will be short-lived, since market sentiment has been affected by slow iPhone sales,” Chen said.
“Moreover, the Washington-Beijing trade dispute has prompted foreign institutional investors to cut their holdings in Hon Hai, which has a broad production base in China,” Chen said.
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