Textile maker Ruentex Industries Ltd (潤泰全) and affiliated developer Ruentex Development Co (潤泰新) yesterday saw their share prices plunge to the daily limit for the second straight day, as jitters over potential losses linked to their stakes in Nan Shan Life Insurance Co (南山人壽) linger.
The panic sell-off came after officials from the two companies said on Wednesday the firms would re-evaluate their assets to better reflect their worth.
Ruentex Industries and Ruentex Development own stakes of 26.62 percent and 25.11 percent respectively in Nan Shan Life, whose net worth last quarter could falter into negative territory due to steep bond and stock price corrections.
Photo: Allen Wu, Taipei Times
Ruentex Industries shares yesterday tumbled 9.88 percent to NT$65.7 on the Taiwan Stock Exchange yesterday, while Ruentex Development shares slumped 9.89 percent to NT$59.2, with more than 50,000 incomplete sell orders at the end of the session.
The companies said their financial standing should look better following asset re-evaluations, and they have no intention of selling assets at present.
The net-worth decline at Nan Shan Life stems from global fund redeployment to respond to interest rate hikes by major central banks, Ruentex officials said, adding that the financial situation should improve once monetary policymakers change course.
Net worth of Ruentex Industries shrank 45 percent quarterly to NT$83.57 in the first quarter, while Ruentex Development fell to NT$33.95.
Nan Shan Life clarified in a statement on Wednesday that it accumulated NT$37.8 billion (US$1.26 billion) of income in the first six months of this year, with 300 percent of risk-based capital, higher than the required 200 percent.
Unnamed Ruentex officials said that Nan Shan’s net worth would not become negative, even after writing down investment losses.
The sources said that investment in Nan Shan could push the net worth of Runtex Industries down to NT$5 in a worst-case scenario, but Ruentex Development should fare better.
Ruentex Group (潤泰集團) chairman Samuel Yin (尹衍樑) told Chinese-language media that speculation of related financial woes at Nan Shan Life was inaccurate.
Meanwhile, shoemaker Pou Chen Corp’s (寶成工業) 18.09 percent stake in Nan Shan Life would not affect its core operations and it would not seek to burnish its financial statement via accounting method changes, company vice president Bruce Shih (施志宏) told a news conference on Wednesday.
Pou Chen, the world’s largest contract manufacturer of branded athletic and casual footwear, would not cut holdings in Nan Shan Life nor increase its capital to handle the matter, Shih said.
Share prices in Pou Chen yesterday closed down 4.15 percent to NT$26.55, Taiwan Stock Exchange data showed.
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