The worst is over for ASE's market performance: investors
By Ted Chen, The China Post
December 17, 2013, 12:08 am TWN
TAIPEI, Taiwan -- Shares of Advanced Semiconductor Engineering Inc, (ASE, 日月光) yesterday plunged 7 percent on continued revelations of the company's unscrupulous activities, while foreign institutional investors maintained an upbeat outlook on the company's operating performance, asserting that the worst is over.
Soon after the opening bell yesterday, the company's shares tumbled from NT$25.75, and remained suppressed at NT$25.75 until closing, losing NT$1.90 or 7 percent, the maximum movement allowed on the Taiwan Stock Exchange.
In light of the developments, a number of foreign institutional investors reiterated their decision to increase holdings of ASE shares, saying that concerns over the company's environmental blunders have already been reflected in the market. “The lower the price drops, the more we will buy” represents a common strategy employed among the foreign institutional investors circles recently according to market observers.
According to reports, foreign institutional investors' will remain undeterred in their drive to increase holdings on ASE shares unless three conditions are met, the indictment and sentencing of the company's chairman or president, a court ruling deeming the wastewater dumping in Kaohsiung and Zhongli illegal, and if mandatory factory closures persist for more than 6 months, or if impacts to revenues reach 20 to 30 percent.
Despite reports indicating that the K7 facility may be ordered to cease operations on Dec. 21, a U.S.-based foreign institutional investor yesterday continued to advise its clients to continue buying ASE shares, citing the fact that the K7 plant is still currently up and running, said a market commentator.
A Japanese institutional investor however, stated that the case may continue escalating, while another U.S.-based investment firm stated that if the issue continues to heighten and grow politicized, it may develop to be more than a stumble in the short-term, and hamper Taiwan's semiconductor sector for the next decade.
Meanwhile, environmental authorities confirmed reports that the company's Kaohsiung-based K7 facility had been dumping untreated toxic wastewater containing heavy metals and strong acids into the Hou-chin River.
Reports indicate that the K7 facility may received an order from the Environmental Protection Administration (環保署) to cease operations until the situation is improved, as soon as December 21. In addition to its Zhongli-based plant, fifteen other ASE facilities are now being combed over by environmental inspectors.