Taiwan Equity Sales to `Energize' Market as Tech Rally Falters, Kurz Says
Sept. 8 (Bloomberg) -- Peter Kurz, head of Taiwan research at Citigroup Inc., talks about the prospects for new listings of overseas and Taiwanese companies on the island. Yangzijiang Shipbuilding Holdings Ltd., the first Chinese-owned company to sell shares in Taiwan, rose on the first day of trading for its depositary receipts on the island’s stock exchange. Kurz speaks with Rishaad Salamat on Bloomberg Television. (Source: Bloomberg)
Taiwan’s new listings by local and overseas companies will “energize” the stock market and draw more capital as technology-led gains falter, according to Citigroup Inc.
Yangzijiang Shipbuilding Holdings Ltd. surged on its debut today after raising NT$4.5 billion ($141 million) in the first sale of Taiwan depositary receipts by a Chinese-owned company. Further listings by mainland companies will boost what has been a “very quiet capital market” for most of the past decade, Peter Kurz, Citigroup’s head of Taiwan research, said in a Bloomberg Television interview.
The listings are “not only going to create greater diversity for the Taiwan stock market but also draw more capital in,” said Kurz, who was ranked first for Taiwan research for the past three years by Institutional Investor. “This is going to energize the market. Hopefully, it’ll drive the market higher in the long run as well.”
Yangzijiang’s TDRs, as the depositary receipts are known, jumped 6.9 percent. The benchmark Taiex Index retreated 0.1 percent, compared with a 1.1 percent decline in the MSCI Asia Pacific Index. The Taiwanese gauge has lost 3.8 percent this year while the regional index is little changed.
China and Taiwan, ruled separately for six decades after a civil war, signed an Economic Cooperation Framework Agreement in June aimed at boosting trade ties between the two. The deal is a “milestone” for Taiwan, Kurz said on Aug. 19, while CLSA Asia- Pacific Markets said Taiwan stocks are poised for a “golden decade” following the agreement.
Want Want, Tingyi
Want Want China Holdings Ltd., the country’s largest maker of rice cakes and flavored milk, and Tingyi (Cayman Islands) Holding Corp., China’s biggest maker of packaged food, were among Taiwanese-controlled companies that operate on the mainland that returned to the island last year after first selling shares overseas.
These share sales could increase investor interest in Taiwan’s domestic-demand stocks and help limit fluctuations tied to the outlook for electronics exports, according to Kurz. Technology-related companies account for at least half the Taiex’s weighting and groups tracking the industry make up the four worst performers on the gauge this year.
“Going forward, we’re seeing a short-term, and possible a long-term, slowdown in tech exports and the sector itself has been seeing pretty heavy selling pressure,” Kurz said. “This could be a new venue for the money to move in, keep it in Taiwan and keep the market moving possibly higher in the long run.”
To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net
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