Monday, December 14, 2009

FSC brushes off concerns of excessive TDR price hikes

FSC brushes off concerns of excessive TDR price hikes
Wednesday, Dec 09, 2009

The Financial Supervisory Commission (FSC) dismissed market speculation yesterday of exaggerated price hikes in the recent issuances of Taiwan Depository Receipts (TDRs) by six non-Taiwan-based companies.

“The price discrepancy between the TDRs and their original shares [listed in bourses outside Taiwan] was a result of the discrepancy of supply and demand in each market and different valuation to their future price-to-earning ratio,” commission Vice Chairman Wu Tang-chieh (吳當傑) told a media briefing.FSC statistics showed that, as of the end of last month, these TDRs have averaged a 75 percent increase in their prices, which is lower than the averaged price hike of 93 percent experienced by domestic companies during the first few sessions of their initial public offerings.

The commission, however, will consult with Taiwan Stock Exchange Corp and the Taiwan Securities Association (券商公會) to develop measures to ease the potential price hike of TDRs by moderating their supply, Wu said.Before Tingyi (Cayman Islands) Holding Corp (康師傅控股) began its TDR sales yesterday, investors had lodged complains about its price hike, a 19 percent premium on its shares traded in Hong Kong. Wu also shrugged off market concerns that the issuance of TDRs would squeeze domestic companies’ fund-raising plans or lead to an exodus of capital.“No statistics support such concerns,” he said.The commission’s statistics showed that, as of Monday, six firms operated by Taiwanese businesspeople abroad, including Want Want China Holdings Ltd (中國旺旺控股), Ju Teng International Holdings Ltd (巨騰) and New Focus Auto Tech Holdings Ltd (新焦點汽車), had raised a total of NT$10.7 billion (US$331.7 million) through TDR issuances, 63.6 percent of which stayed in Taiwan to fund their local investments.

In the first 10 months of this year, 118 domestic publicly traded companies have raised NT$218 billion, data showed, or a 23.9 percent growth over the previous year.

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