TWSE encourages firms'buyback of treasury shares
The China Post news staffThe China Post news staff--The Taiwan Stock Exchange (TWSE) urged listed companies to buy back treasury shares in hopes of boosting the local bourse, as trading remained sluggish yesterday.
October 20, 2012, 12:06 am TWN
All companies listed on the main board would be allowed to buy back a total of more than NT$1.87 trillion in treasury shares, judging from their levels of cash equivalents in the first half of this year, the United Evening News cited stock market regulations as saying.
So far this year, 66 listed companies have completed treasury stock buybacks worth only a total of NT$7.82 billion, the paper said, adding that 11 others are still in the process of repurchasing shares from the open market, with the total estimated at NT$852 million.
Observers said such buyback amounts are meaningless in shoring up the stock market, and it remains doubtful whether listed companies will respond to the TWSE's call.
The TWSE seems to have exhausted all possible means to boost the local bourse, where turnover remained low at only NT$58.197 billion yesterday. Trade volume for the week plunged to the lowest since Dec. 26, 2008, at NT$289.825 billion.
The weighted index dropped 56.65 points to close at 7,408.76 amid speculation that the government's stabilization funds could be coming for the rescue. But there were no signs that the government funds were entering the market despite the fact that the local bourse is at present one of the weakest financial markets in the world.
Confidence remained low amid weak global economic conditions, and the Taiwan market is bracing for bad news coming out the companies' upcoming third-quarter investors' conferences.
Some analysts have blamed the introduction of the stock gain tax for investors' reluctance to enter the market.
But others said even if the government decided to lower both the stock transaction tax and stock gain tax, it would still have limited help to the market.