As stocks tumble, Taiwan depository receipts provide an alternative

As of yesterday's close, five overseas firms have seen their TDRs at lower prices than those of the original stocks traded in their own countries, SinoPac said. Those companies include Want Want China Holdings Ltd., Tingyi Holding Corporation, Vietnam Manufacturing and Export Processing Holdings Ltd., New Focus Auto Tech Holdings Ltd., and Kith Holdings Ltd. These margins of depreciation is anywhere between one and 22 percent, SinoPac said.

SinoPac pointed out investors of TDRs issued by overseas firms may enjoy the same benefits as shareholders of the original shares issued by those firms.

Investors of TDRs may also exchange their TDRs with the original shares traded overseas, sell them and make a profit from the price difference, SinoPac said.

Using Tingyi as an example, SinoPac said investors could buy 100,000 units of its TDRs and trade them for 50,000 shares for Tingyi shares traded in Hong Kong. They could then sell them in Hong Kong and make a profit of about NT$115,000, based on Saturday's Tingyi closing price and a cost of NT$13,000 in transaction fee and tax. Exchanging TDRs for their original shares traded in Hong Kong takes about five to eight days, while selling those shares in Hong Kong takes about three days, SinoPac said.

Taiwan has seen an increasing number of foreign firms issuing TDRs. Besides the above-mentioned companies, other overseas listing in Taiwan include Ju Teng International Holdings Ltd. and Yorkey Optical International (Cayman) Ltd.

According to TSE, many overseas firms have expressed their interest in getting listed in Taiwan via the issuance of TDRs, due to many factors. Most of these firms are small to medium-sized technology companies that are not so well-known or have high liquidity on their home countries' exchanges. Plus, Taiwan Stock Exchange has heavily promoted the island's investment environment to these overseas firms through the holding of road shows and trade symposiums.

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